10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 30, 2006

	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-14222

SUBURBAN PROPANE PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware			22-3410353
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

240 Route 10 West
Whippany, NJ 07981
(973) 887-5300

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer                        Accelerated filer                       Non-accelerated filer   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No   

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

INDEX TO FORM 10-Q

						Page
			PART I
ITEM 1.			FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Balance Sheets as of December 30, 2006 and     September 30, 2006					1
			Condensed Consolidated Statements of Operations for the three months ended     December 30, 2006 and December 24, 2005					2
			Condensed Consolidated Statements of Cash Flows for the three months ended     December 30, 2006 and December 24, 2005					3
			Condensed Consolidated Statement of Partners’ Capital for the three months     ended December 30, 2006					4
			Notes to Condensed Consolidated Financial Statements					5
ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS					18
ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK					30
ITEM 4.			CONTROLS AND PROCEDURES					32
			PART II
ITEM 6.			EXHIBITS					33

SIGNATURES					34

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements (‘‘Forward-Looking Statements’’) as defined in the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended, relating to future business expectations and predictions and financial condition and results of operations of Suburban Propane Partners, L.P. (the ‘‘Partnership’’). Some of these statements can be identified by the use of forward-looking terminology such as ‘‘prospects,’’ ‘‘outlook,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘intends,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘anticipates,’’ ‘‘expects’’ or ‘‘plans’’ or the negative or other variation of these or similar words, or by discussion of trends and conditions, strategies or risks and uncertainties. These Forward-Looking Statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such Forward-Looking Statements (statements contained in this Quarterly Report identifying such risks and uncertainties are referred to as ‘‘Cautionary Statements’’). The risks and uncertainties and their impact on the Partnership’s results include, but are not limited to, the following risks:

	•	The impact of weather conditions on the demand for propane, fuel oil and other refined fuels, natural gas and electricity;

	•	Fluctuations in the unit cost of propane, fuel oil and other refined fuels and natural gas, and the impact of price increases on customer conservation;

	•	The ability of the Partnership to compete with other suppliers of propane, fuel oil and other energy sources;

	•	The impact on the price and supply of propane, fuel oil and other refined fuels from the political, military or economic instability of the oil producing nations, global terrorism and other general economic conditions;

	•	The ability of the Partnership to acquire and maintain reliable transportation for its propane, fuel oil and other refined fuels;

	•	The ability of the Partnership to retain customers;

	•	The impact of energy efficiency and technology advances on the demand for propane and fuel oil;

	•	The ability of management to continue to control expenses including the results of our recent field realignment initiative;

	•	The impact of changes in applicable statutes and government regulations, or their interpretations, including those relating to the environment and global warming and other regulatory developments on the Partnership’s business;

	•	The impact of legal proceedings on the Partnership’s business;

	•	The impact of operating hazards that could adversely affect the Partnership’s operating results to the extent not covered by insurance; and

	•	The Partnership’s ability to integrate acquired businesses successfully.

Some of these Forward-Looking Statements are discussed in more detail in ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ in this Quarterly Report. Reference is also made to the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2006. On different occasions, the Partnership or its representatives have made or may make Forward-Looking Statements in other filings with the Securities and Exchange Commission (‘‘SEC’’), press releases or oral statements made by or with the approval of one of the Partnership’s authorized executive officers. Readers are cautioned not to place undue reliance on Forward-Looking Statements, which reflect management’s view only as of the date made. The Partnership undertakes no obligation to update any Forward-Looking Statement or Cautionary Statement. All subsequent written and oral Forward-Looking Statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements in this Quarterly Report and in future SEC reports.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

			December 30, 2006						September 30, 2006
ASSETS
Current assets:
Cash and cash equivalents				$	26,378					$	60,571
Accounts receivable, less allowance for doubtful accounts of $5,671 and $5,530, respectively					127,788						78,547
Inventories					89,389						79,418
Prepaid expenses and other current assets					33,252						16,815
Total current assets					276,807						235,351
Property, plant and equipment, net					389,477						390,383
Goodwill					281,359						281,359
Other intangible assets, net					19,949						18,098
Other assets					29,572						28,695
Total assets				$	997,164					$	953,886
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable				$	80,649					$	57,372
Accrued employment and benefit costs					24,779						35,510
Accrued insurance					15,630						7,360
Customer deposits and advances					57,518						62,630
Accrued interest					1,065						8,371
Other current liabilities					18,797						21,373
Total current liabilities					198,438						192,616
Long-term borrowings					548,362						548,304
Postretirement benefits obligation					27,531						27,759
Accrued insurance					39,316						38,053
Accrued pension liability					32,062						31,086
Other liabilities					16,443						15,367
Total liabilities					862,152						853,185
Commitments and contingencies
Partners’ capital:
Common Unitholders (32,672 and 30,314 units issued and outstanding at December 30, 2006 and September 30, 2006, respectively)					202,496						170,151
General Partner					—						(1,969	)
Deferred compensation					(5,692	)					(5,704	)
Common Units held in trust, at cost					5,692						5,704
Accumulated other comprehensive loss					(67,484	)					(67,481	)
Total partners’ capital					135,012						100,701
Total liabilities and partners’ capital				$	997,164					$	953,886

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)
(unaudited)

			Three Months Ended
			December 30, 2006						December 24, 2005
Revenues
Propane				$	286,879					$	310,292
Fuel oil and refined fuels					68,870						105,305
Natural gas and electricity					22,745						37,943
HVAC					18,459						31,227
All other					2,034						2,696
					398,987						487,463
Costs and expenses
Cost of products sold					230,874						315,843
Operating					84,060						100,261
General and administrative					12,902						14,216
Restructuring costs					385						—
Depreciation and amortization					7,136						8,211
					335,357						438,531
Income before interest expense and provision for income taxes					63,630						48,932
Interest expense, net					9,216						10,567
Income before provision for income taxes					54,414						38,365
Provision for income taxes					762						150
Income from continuing operations					53,652						38,215
Discontinued operations:
Gain on exchange of customer service centers (Note 6)					1,002						—
Net income				$	54,654					$	38,215
General Partner’s interest in net income					—						1,187
Limited Partners’ interest in net income				$	54,654					$	37,028
Income per Common Unit – basic
Income from continuing operations				$	1.67					$	1.15
Discontinued operations					0.03						—
Net income				$	1.70					$	1.15
Weighted average number of Common Units outstanding – basic					32,193						30,299
Income per Common Unit – diluted
Income from continuing operations				$	1.66					$	1.14
Discontinued operations					0.03						—
Net income				$	1.69					$	1.14
Weighted average number of Common Units outstanding – diluted					32,376						30,391

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

			Three Months Ended
			December 30, 2006						December 24, 2005
Cash flows from operating activities:
Net income				$	54,654					$	38,215
Adjustments to reconcile net income to net cash used in operations:
Depreciation expense					6,600						7,244
Amortization of intangible assets					536						967
Amortization of debt origination costs					332						331
Compensation cost recognized under Restricted Unit Plan					1,297						615
Amortization of discount on long-term borrowings					58						58
Gain on exchange of customer service centers					(1,002	)					—
Gain on disposal of property, plant and equipment, net					(247	)					(44	)
Changes in assets and liabilities:
(Increase) in accounts receivable					(49,361	)					(74,806	)
(Increase) in inventories					(9,962	)					(14,833	)
(Increase)/decrease in prepaid expenses and other current assets					(16,095	)					5,053
Increase in accounts payable					23,203						39,992
(Decrease)/increase in accrued employment and benefit costs					(10,731	)					1,865
(Decrease) in accrued interest					(7,306	)					(6,918	)
Increase/(decrease) in other accrued liabilities					173						(10,681	)
(Increase)/decrease in other noncurrent assets					(1,129	)					537
Increase in other noncurrent liabilities					3,087						3,473
Net cash (used in) operating activities					(5,893	)					(8,932	)
Cash flows from investing activities:
Capital expenditures					(8,152	)					(6,190	)
Proceeds from sale of property, plant and equipment					1,489						252
Net cash (used in) investing activities					(6,663	)					(5,938	)
Cash flows from financing activities:
Short-term borrowings					—						36,250
Partnership distributions					(21,637	)					(19,162	)
Net cash (used in)/provided by financing activities					(21,637	)					17,088
Net (decrease)/increase in cash and cash equivalents					(34,193	)					2,218
Cash and cash equivalents at beginning of period					60,571						14,411
Cash and cash equivalents at end of period				$	26,378					$	16,629

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
(in thousands)
(unaudited)

			Number of Common Units						Common Unitholders						General Partner						Deferred Compensation						Common Units Held in Trust						Accumulated Other Comprehensive (Loss)						Total Partners’ Capital						Comprehensive Income
Balance at September 30, 2006					30,314					$	170,151					$	(1,969	)				$	(5,704	)				$	5,704					$	(67,481	)				$	100,701
Net income											54,654																														54,654					$	54,654
Other comprehensive income:
Net unrealized losses on cash
flow hedges																																			(197	)					(197	)					(197	)
Reclassification of realized losses on cash flow hedges into earnings																																			194						194						194
Comprehensive income																																														$	54,651
Partnership distributions											(21,637	)																													(21,637	)
Common Units issued under Restricted Unit Plan					58																																				—
Common Units issued in exchange of General Partner interest					2,300						80,443																														80,443
Exchange and cancellation of General Partner interest											(82,412	)					1,969																								(80,443	)
Common Units distributed from trust																							12						(12	)											—
Compensation cost recognized under Restricted Unit Plan, net of forfeitures											1,297																														1,297
Balance at December 30, 2006					32,672					$	202,496					$	—					$	(5,692	)				$	5,692					$	(67,484	)				$	135,012

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per unit amounts)
(unaudited)

1.	Partnership Organization and Formation

Suburban Propane Partners, L.P. (the ‘‘Partnership’’) is a publicly traded Delaware limited partnership principally engaged, through its operating partnership and subsidiaries, in the retail marketing and distribution of propane, fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. In addition, to complement its core marketing and distribution businesses, the Partnership services a wide variety of home comfort equipment, particularly for heating, ventilation and air conditioning (‘‘HVAC’’). The limited partner interests in the Partnership are evidenced by common units traded on the New York Stock Exchange (‘‘Common Units’’) with 32,672,193 Common Units outstanding at December 30, 2006. The holders of Common Units are entitled to participate in distributions and exercise the rights and privileges available to limited partners under the Third Amended and Restated Agreement of Limited Partnership (the ‘‘Partnership Agreement’’), adopted on October 19, 2006 following approval by Common Unitholders at the Partnership’s Tri-Annual Meeting. Rights and privileges under the Partnership Agreement include, among other things, the election of all members of the Board of Supervisors, and voting on the removal of the general partner.

Suburban Propane, L.P. (the ‘‘Operating Partnership’’), a Delaware limited partnership, is the Partnership’s operating subsidiary formed to operate the propane business and assets. In addition, Suburban Sales & Service, Inc. (the ‘‘Service Company’’), a subsidiary of the Operating Partnership, was formed to operate the service work and appliance and parts businesses of the Partnership. The Operating Partnership, together with its direct and indirect subsidiaries, accounts for substantially all of the Partnership’s assets, revenues and earnings. The Partnership, the Operating Partnership and the Service Company commenced operations in March 1996 in connection with the Partnership’s initial public offering.

The general partner of both the Partnership and the Operating Partnership is Suburban Energy Services Group LLC (the ‘‘General Partner’’), a Delaware limited liability company. On October 19, 2006, the Partnership consummated an agreement with its General Partner to exchange 2,300,000 newly issued Common Units for the General Partner’s incentive distribution rights (‘‘IDRs’’) and the economic interest in the Partnership and the Operating Partnership included in the general partner interests therein (the ‘‘GP Exchange Transaction’’). Prior to the GP Exchange Transaction, the General Partner was majority-owned by senior management of the Partnership and owned 224,625 general partner units (an approximate 0.74% ownership interest) in the Partnership and a 1.0101% general partner interest in the Operating Partnership. The General Partner also held all outstanding IDRs of the Partnership and appointed two of the five members of the Board of Supervisors. As a result of the GP Exchange Transaction, the General Partner has no economic interest in either the Partnership or the Operating Partnership other than as a holder of 784 Common Units that will remain in the General Partner and there are no IDRs outstanding or provided for under the Partnership Agreement. As an accommodation to the Partnership, its Chief Executive Officer serves as the sole member of the General Partner.

On January 5, 2001, Suburban Holdings, Inc., a subsidiary of the Operating Partnership, was formed to hold the stock of Gas Connection, Inc. (d/b/a HomeTown Hearth & Grill), Suburban @ Home, Inc. (‘‘Suburban @ Home’’) and Suburban Franchising, Inc. (‘‘Suburban Franchising’’). On December 31, 2006, Suburban Holdings, Inc. and Suburban @ Home merged into the Service Company. On January 1, 2007, HomeTown Hearth & Grill and Suburban Franchising converted from C-Corporations to single-member LLCs owned by the Service Company. HomeTown Hearth & Grill sells and installs natural gas and propane gas grills, fireplaces and related accessories and supplies. Suburban Franchising creates and develops propane related franchising business opportunities.

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On November 21, 2003, Suburban Heating Oil Partners, LLC, a subsidiary of HomeTown Hearth & Grill, was formed to acquire and operate the fuel oil and refined fuels and HVAC assets and businesses of Agway Energy acquired on December 23, 2003. In addition, Agway Energy Services, LLC, also a subsidiary of HomeTown Hearth & Grill, was formed to acquire and operate the natural gas and electricity marketing business of Agway Energy.

Suburban Energy Finance Corporation, a direct wholly-owned subsidiary of the Partnership, was formed on November 26, 2003 to serve as co-issuer, jointly and severally with the Partnership, of the Partnership’s 6.875% senior notes due in 2013 (see Note 8).

2.	Basis of Presentation

Principles of Consolidation.    The consolidated financial statements include the accounts of the Partnership, the Operating Partnership and all of its direct and indirect subsidiaries. All significant intercompany transactions and account balances have been eliminated. As a result of the GP Exchange Transaction, the General Partner no longer has any economic interest in the Partnership or the Operating Partnership apart from 784 Common Units held by it. The Partnership consolidates the results of operations, financial condition and cash flows of the Operating Partnership as a result of the Partnership’s 100% limited partner interest in the Operating Partnership.

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (‘‘SEC’’). They include all adjustments that the Partnership considers necessary for a fair statement of the results for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed. These financial statements should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, including management’s discussion and analysis of financial condition and results of operations contained therein. Due to the seasonal nature of the Partnership’s operations, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

Fiscal Period.    The Partnership’s fiscal periods typically end on the last Saturday of the quarter.

Derivative Instruments and Hedging Activities.    The Partnership enters into a combination of exchange-traded futures and option contracts, forward contracts and, in certain instances, over-the-counter options (collectively, ‘‘derivative instruments’’) to manage the price risk associated with future purchases of the commodities used in its operations, principally propane and fuel oil, as well as to ensure supply during periods of high demand. All derivative instruments are reported on the balance sheet, within other current assets or other current liabilities, at their fair values pursuant to Statement of Financial Accounting Standards (‘‘SFAS’’) No. 133, ‘‘Accounting for Derivative Instruments and Hedging Activities,’’ as amended by SFAS Nos. 137, 138, 149 and 155 (‘‘SFAS 133’’). On the date that futures, forward and option contracts are entered into, the Partnership makes a determination as to whether the derivative instrument qualifies for designation as a hedge. Changes in the fair value of derivative instruments are recorded each period in current period earnings or other comprehensive income (loss) (‘‘OCI’’), depending on whether a derivative instrument is designated as a hedge and, if so, the type of hedge. For derivative instruments designated as cash flow hedges, the Partnership formally assesses, both at the hedge contract’s inception and on an ongoing basis, whether the hedge contract is highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of derivative instruments designated as cash flow hedges are reported in OCI to the extent effective and reclassified into cost of products sold during the same period in which the hedged item affects earnings. The mark-to-market gains or losses on ineffective portions of cash flow hedges used to hedge future purchases are recognized in cost of products sold immediately. Changes in the fair value of derivative instruments that are not designated as hedges are recorded in current period earnings within cost of products sold.

A portion of the Partnership’s option contracts are not classified as hedges and, as such, changes in the fair value of these derivative instruments are recognized within cost of products sold as they occur. The value of certain option contracts that do qualify as hedges and are designated as cash flow hedges under SFAS 133 have two components of value: time value and intrinsic value. The intrinsic

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value is the value by which the option is in the money (i.e., the amount by which the value of the commodity exceeds the exercise or ‘‘strike’’ price of the option). The remaining amount of option value is attributable to time value. The Partnership does not include the time value of option contracts in its assessment of hedge effectiveness and, therefore, records changes in the time value component of the options currently in earnings.

Market risks associated with the trading of futures, options and forward contracts are monitored daily for compliance with the Partnership’s Hedging and Risk Management Policy which includes volume limits for open positions. Open inventory positions are also reviewed and managed daily as to exposures to changing market prices.

At December 30, 2006, the fair value of derivative instruments described above resulted in derivative assets of $8,988 included within prepaid expenses and other current assets and derivative liabilities of $3,061 included within other current liabilities. Cost of products sold included unrealized (non-cash) losses of $987 for the three months ended December 30, 2006 and unrealized (non-cash) gains of $7,042 for the three months ended December 24, 2005 attributable to the change in fair value of derivative instruments not designated as cash flow hedges. At December 30, 2006, unrealized losses on derivative instruments designated as cash flow hedges in the amount of $1,967 were included in OCI and are expected to be recognized in earnings during the next 12 months as the hedged transactions occur. However, due to the volatility of the commodities market, the corresponding value in OCI is subject to change prior to its impact on earnings.

A portion of the Partnership’s long-term borrowings bear interest at a variable rate based upon either LIBOR or Wachovia National Bank’s prime rate, plus an applicable margin depending on the level of the Partnership’s total leverage. Therefore, the Partnership is subject to interest rate risk on the variable component of the interest rate. The Partnership manages part of its variable interest rate risk by entering into interest rate swap agreements. On March 31, 2005, the Partnership entered into a $125,000 interest rate swap contract in conjunction with the Term Loan facility under the Revolving Credit Agreement (see Note 8). The interest rate swap is being accounted for under SFAS 133 and the Partnership has designated the interest rate swap as a cash flow hedge. Changes in the fair value of the interest rate swap are recognized in OCI until the hedged item is recognized in earnings. At December 30, 2006, the fair value of the interest rate swap amounted to $1,262 and is included within other assets.

Use of Estimates.    The preparation of financial statements in conformity with generally accepted accounting principles (‘‘GAAP’’) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates have been made by management in the areas of depreciation and amortization of long-lived assets, insurance and litigation reserves, environmental reserves, pension and other postretirement benefit liabilities and costs, valuation of derivative instruments, asset valuation assessments, tax valuation allowances, as well as the allowance for doubtful accounts. Actual results could differ from those estimates, making it reasonably possible that a change in these estimates could occur in the near term.

Reclassifications.    Certain prior period amounts have been reclassified to conform with the current period presentation.

3.	Exchange of General Partner’s Interests and Incentive Distribution Rights

On October 19, 2006, following approval by the requisite vote of the Common Unitholders of the Partnership at its 2006 Tri-Annual Meeting held on October 17, 2006, the Partnership consummated the GP Exchange Transaction with its General Partner for the acquisition of the General Partner’s IDRs, as well as the economic interest contained in its general partnership interests in both the Partnership and the Operating Partnership, in exchange for 2,300,000 newly issued Common Units having a fair value of approximately $80,443. As a result of the GP Exchange Transaction, the excess of the fair value of the Common Units issued over the $1,969 carrying value of the General Partner interest was recorded as a reduction to the Common Unitholders interest within the condensed consolidated statement of partners’ capital.

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Pursuant to a Distribution, Release and Lockup Agreement by and among the Partnership, the Operating Partnership, the General Partner and the members of the General Partner, the Common Units were distributed to the members of the General Partner in exchange for their membership interests in the General Partner (other than 784 Common Units that will remain in the General Partner). The Common Units issued in the GP Exchange Transaction represented approximately 7% of the total number of Common Units outstanding after consummation of the GP Exchange Transaction.

4.	Restructuring Costs

During the fourth quarter of fiscal 2005 and throughout fiscal 2006, the Partnership approved and initiated plans of reorganization to realign the field operations in an effort to streamline the operating footprint and leverage the system infrastructure to achieve additional operational efficiencies and reduce costs, as well as to restructure its HVAC business (collectively, the ‘‘Restructuring’’). As a result of the Restructuring, the Partnership recorded a restructuring charge of $2,150 during the fourth quarter of fiscal 2005 associated with severance and other employee benefits for approximately 85 positions eliminated and in fiscal 2006 recorded additional charges of $5,276 related to severance and other employee benefits for approximately 325 positions eliminated and $800 related to exit costs, primarily lease termination costs, associated with a plan to exit certain activities of the HomeTown Hearth & Grill business included within the all other business segment. During the three months ended December 30, 2006, the Partnership recorded additional severance charges of $385 associated with additional positions eliminated under the HVAC reorganization.

The components of the remaining restructuring charges are as follows:

			Reserve at September 30, 2006						Charges Through December 30, 2006						Utilization Through December 30, 2006						Reserve at December 30, 2006
Charges expensed:
Severance and other employee costs				$	1,621					$	385					$	(1,102	)				$	904
Other exit costs					854						—						(97	)					757
Total				$	2,475					$	385					$	(1,199	)				$	1,661

The remaining reserve of $1,661 as of December 30, 2006 is expected to be paid out or utilized over the next twelve months.

5.	Inventories

Inventories are stated at the lower of cost or market. Cost is determined using a weighted average method for propane, fuel oil and refined fuels and natural gas, and a standard cost basis for appliances, which approximates average cost. Inventories consist of the following:

			December 30, 2006						September 30, 2006
Propane, fuel oil and refined fuels				$	80,435					$	72,143
Natural gas					3,061						1,148
Appliances and related parts					5,893						6,127
				$	89,389					$	79,418

6.	Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired. In accordance with SFAS No. 142, ‘‘Goodwill and Other Intangible Assets’’ (‘‘SFAS 142’’), goodwill is not amortized. Rather, goodwill is subject to an impairment review at a reporting unit level, on an annual basis in August of each year, or when an event occurs or circumstances change that would

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indicate potential impairment. The Partnership assesses the carrying value of goodwill at a reporting unit level based on an estimate of the fair value of the respective reporting unit. Fair value of the reporting unit is estimated using discounted cash flow analyses taking into consideration estimated cash flows in a ten-year projection period and a terminal value calculation at the end of the projection period.

Other intangible assets consist of the following:

			December 30, 2006						September 30, 2006
Customer lists				$	22,316					$	19,866
Trade names					1,499						1,499
Non-compete agreements					526						986
Other					1,967						1,967
					26,308						24,318
Less: accumulated amortization					6,359						6,220
				$	19,949					$	18,098

During the first quarter of fiscal 2007, in a non-cash transaction, the Partnership completed a transaction in which it disposed of nine customer service centers considered to be non-strategic in exchange for three customer service centers of another company located in Alaska. The Partnership relinquished assets with a fair value of approximately $4,000 and allocated this fair value among the assets received, including $2,450 to the customer list acquired and $1,550 to the property, plant and equipment acquired (primarily tanks and cylinders). This customer list will be amortized over a ten-year period. The Partnership reported a $1,002 gain within discontinued operations for the three months ended December 30, 2006 for the amount by which the fair value of assets relinquished exceeded the carrying value of the assets relinquished.

Aggregate amortization expense related to other intangible assets for the three months ended December 30, 2006 and December 24, 2005 was $536 and $967, respectively.

Aggregate amortization expense related to other intangible assets for the remainder of fiscal 2007 and for each of the five succeeding fiscal years as of December 30, 2006 is as follows: 2007 – $1,693; 2008 – $2,224; 2009 – $2,220; 2010 – $2,205; 2011 – $2,205 and 2012 – $1,730.

7.	Income Per Unit

Subsequent to the GP Exchange Transaction, computations of earnings per Common Unit are performed in accordance with SFAS No. 128 ‘‘Earnings per Share’’ (‘‘SFAS 128’’). Prior to the GP Exchange Transactions, when the General Partner owned IDRs in the Partnership, computations of earnings per Common Unit were performed in accordance with Emerging Issues Task Force (‘‘EITF’’) consensus 03-6 ‘‘Participating Securities and the Two-Class Method Under FAS 128’’ (‘‘EITF 03-6’’), when applicable. EITF 03-6 requires, among other things, the use of the two-class method of computing earnings per unit when participating securities exist. The two-class method is an earnings allocation formula that computes earnings per unit for each class of Common Unit and participating security according to distributions declared and the participating rights in undistributed earnings, as if all of the earnings were distributed to the limited partners and the general partner (inclusive of the IDRs of the General Partner which were considered participating securities for purposes of the two-class method). Net income was allocated to the Common Unitholders and the General Partner in accordance with their respective Partnership ownership interests, after giving effect to any priority income allocations for incentive distributions allocated to the General Partner. For purposes of the computation of income per Common Unit for the three months ended December 30, 2006, earnings that would have been allocated to the General Partner for the period prior to the GP Exchange Transaction were not significant.

Basic income per unit for the three months ended December 30, 2006 is computed by dividing net income by the weighted average number of outstanding Common Units. Diluted income per unit for

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the three months ended December 30, 2006 is computed by dividing net income by the weighted average number of outstanding Common Units and time vested Restricted Units granted under the 2000 Restricted Unit Plan (see Note 10).

Basic net income per Common Unit for the three months ended December 24, 2005 was computed by dividing the limited partners’ share of income, calculated under the two-class method of computing earnings under EITF 03-6, by the weighted average number of outstanding Common Units. Diluted net income per Common Unit for the three months ended December 24, 2005 was computed by dividing the limited partners’ share of income, calculated under the two-class method of computing earnings under EITF 03-6, by the weighted average number of outstanding Common Units and time vested Restricted Units granted under the Partnership’s 2000 Restricted Unit Plan (see Note 10). For the three months ended December 24, 2005, the computation of net income per Common Unit under EITF 03-6 resulted in a negative impact of $0.07 per Common Unit compared to the computation under FAS 128.

In computing diluted income per unit, weighted average units outstanding used to compute basic income per unit were increased by 182,637 and 92,324 units for the three months ended December 30, 2006 and December 24, 2005, respectively, to reflect the potential dilutive effect of the unvested Restricted Units outstanding using the treasury stock method.

8.	Short-Term and Long-Term Borrowings

Short-term and long-term borrowings consist of the following:

			December 30, 2006						September 30, 2006
Senior Notes, 6.875%, due December 15, 2013, net of unamortized discount of $1,638 and $1,696, respectively				$	423,362					$	423,304
Term Loan, 6.29% to 7.16%, due March 31, 2010					125,000						125,000
					548,362						548,304
Less: current portion					—						—
				$	548,362					$	548,304

The Partnership and its subsidiary, Suburban Energy Finance Corporation, have issued $425,000 aggregate principal amount of Senior Notes (the ‘‘2003 Senior Notes’’) with an annual interest rate of 6.875%. The Partnership’s obligations under the 2003 Senior Notes are unsecured and rank senior in right of payment to any future subordinated indebtedness and equally in right of payment with any future senior indebtedness. The 2003 Senior Notes are structurally subordinated to, which means they rank effectively behind, any debt and other liabilities of the Operating Partnership. The 2003 Senior Notes mature on December 15, 2013, and require semi-annual interest payments in June and December. The Partnership is permitted to redeem some or all of the 2003 Senior Notes any time on or after December 15, 2008, at redemption prices specified in the indenture governing the 2003 Senior Notes. In addition, in the event of a change of control of the Partnership, as defined in the 2003 Senior Notes, the Partnership must offer to repurchase the notes at 101% of the principal amount repurchased, if the holders of the notes exercise the right of repurchase.

The Operating Partnership has a revolving credit facility, the Third Amended and Restated Credit Agreement (the ‘‘Revolving Credit Agreement’’), which expires on March 31, 2010. The Revolving Credit Agreement provides for a five-year $125,000 term loan facility (the ‘‘Term Loan’’) and a separate working capital facility which provides available revolving borrowing capacity up to $175,000. In addition, under the third amendment to the Revolving Credit Agreement the Operating Partnership is authorized to incur additional indebtedness of up to $10,000 in connection with capital leases and up to $20,000 in short-term borrowings during the period from December 1 to April 1 in each fiscal year to provide additional working capital during periods of peak demand, if necessary.

Borrowings under the Revolving Credit Agreement, including the Term Loan, bear interest at a rate based upon either LIBOR or Wachovia National Bank’s prime rate, plus, in each case, the

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applicable margin or the Federal Funds rate plus ½ of 1%. An annual facility fee ranging from 0.375% to 0.50%, based upon certain financial tests, is payable quarterly whether or not borrowings occur. As of December 30, 2006 and September 30, 2006, there were no borrowings outstanding under the working capital facility of the Revolving Credit Agreement and there were no borrowings during the first quarter of fiscal 2007.

In connection with the Term Loan, the Operating Partnership also entered into an interest rate swap contract with a notional amount of $125,000. Effective March 31, 2005 through March 31, 2010, the Operating Partnership will pay a fixed interest rate of 4.66% to the issuing lender on notional principal amount of $125,000, effectively fixing the LIBOR portion of the interest rate at 4.66%. In return, the issuing lender will pay to the Operating Partnership a floating rate, namely LIBOR, on the same notional principal amount. The applicable margin above LIBOR, as defined in the Revolving Credit Agreement, will be paid in addition to this fixed interest rate of 4.66%. The fair value of the interest rate swap amounted to $1,262 and $1,182 at December 30, 2006 and September 30, 2006, respectively, and is included in other assets with a corresponding amount included within OCI.

The Revolving Credit Agreement and the 2003 Senior Notes both contain various restrictive and affirmative covenants applicable to the Operating Partnership and the Partnership, respectively, including (i) restrictions on the incurrence of additional indebtedness, and (ii) restrictions on certain liens, investments, guarantees, loans, advances, payments, mergers, consolidations, distributions, sales of assets and other transactions. Under the Revolving Credit Agreement, the Operating Partnership is required to maintain a leverage ratio (the ratio of total debt to EBITDA) of less than 4.0 to 1. In addition, the Operating Partnership is required to maintain an interest coverage ratio (the ratio of EBITDA to interest expense) of greater than 2.5 to 1 at the Partnership level. The Partnership and the Operating Partnership were in compliance with all covenants and terms of the 2003 Senior Notes and the Revolving Credit Agreement as of December 30, 2006.

Debt origination costs representing the costs incurred in connection with the placement of, and the subsequent amendment to, the 2003 Senior Notes and the Revolving Credit Agreement were capitalized within other assets and are being amortized on a straight-line basis over the term of the respective debt agreements. Other assets at December 30, 2006 and September 30, 2006 include debt origination costs with a net carrying amount of $7,225 and $7,557, respectively. Aggregate amortization expense related to deferred debt origination costs included within interest expense for the three months ended December 30, 2006 and December 24, 2005 was $332 and $331, respectively.

The aggregate amounts of long-term debt maturities subsequent to December 30, 2006 are as follows: 2007 – $0; 2008 – $0; 2009 – $0; 2010 – $125,000; and, thereafter – $423,362.

9.	Distributions of Available Cash

The Partnership makes distributions to its partners approximately 45 days after the end of each fiscal quarter of the Partnership in an aggregate amount equal to its available cash (‘‘Available Cash’’) for such quarter. Available Cash, as defined in the Partnership Agreement, generally means all cash on hand at the end of the respective fiscal quarter less the amount of cash reserves established by the Board of Supervisors in its reasonable discretion for future cash requirements. These reserves are retained for the proper conduct of the Partnership’s business, the payment of debt principal and interest and for distributions during the next four quarters.

Prior to October 19, 2006, the General Partner had IDRs which represented an incentive for the General Partner to increase distributions to Common Unitholders in excess of the target quarterly distribution of $0.55 per Common Unit. With regard to the first $0.55 of quarterly distributions paid in any given quarter, 98.26% of the Available Cash was distributed to the Common Unitholders and 1.74% was distributed to the General Partner. With regard to the balance of quarterly distributions in excess of the $0.55 per Common Unit target distribution, 85% of the Available Cash was distributed to the Common Unitholders and 15% was distributed to the General Partner. As a result of the GP Exchange Transaction, the IDRs were cancelled and the General Partner is no longer entitled to receive any cash distributions in respect of its general partner interests. Accordingly, beginning with the quarterly distribution paid on November 14, 2006 in respect of the fourth quarter of fiscal 2006, 100% of all cash distributions are paid to holders of Common Units.

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On January 25, 2007, the Partnership announced a quarterly distribution of $0.6875 per Common Unit, or $2.75 on an annualized basis, in respect of the first quarter of fiscal 2007 payable on February 13, 2007 to holders of record on February 6, 2007. This quarterly distribution included an increase of $0.025 per Common Unit, or $0.10 per Common Unit on an annualized basis, announced on January 25, 2007.

10.	Share-Based Compensation Arrangements

The Partnership accounts for its share-based compensation arrangements under the revised SFAS No. 123, ‘‘Share Based Payments’’ (‘‘SFAS 123R’’) which requires the recognition of compensation cost over the respective service period for employee services received in exchange for an award of equity or equity-based compensation based on the grant date fair value of the award. SFAS 123R also requires the measurement of liability awards under a share-based payment arrangement based on remeasurement of the award’s fair value at the conclusion of each quarterly reporting period until the date of settlement, taking into consideration the probability that the performance conditions will be satisfied. The Partnership has historically recognized unearned compensation associated with awards under its 2000 Restricted Unit Plan ratably to expense over the vesting period based on the fair value of the award on the grant date and has historically recognized compensation cost and the associated unearned compensation liability for equity-based awards under its Long-Term Incentive Plan consistent with the requirements of SFAS 123R.

2000 Restricted Unit Plan.    In November 2000, the Partnership adopted the Suburban Propane Partners, L.P. 2000 Restricted Unit Plan (the ‘‘2000 Restricted Unit Plan’’) which authorizes the issuance of Common Units to members of the Board of Supervisors, executives, managers and other employees of the Partnership. On October 19, 2006, the Partnership adopted amendments to the 2000 Restricted Unit Plan which, among other things, increased the number of Common Units authorized for issuance under the plan by 230,000 for a total of 717,805. Restricted Units issued under the 2000 Restricted Unit Plan vest over time with 25% of the Common Units vesting at the end of each of the third and fourth anniversaries of the grant date and the remaining 50% of the Common Units vesting at the end of the fifth anniversary of the grant date. The 2000 Restricted Unit Plan participants are not eligible to receive quarterly distributions or vote their respective Restricted Units until vested. Restrictions also limit the sale or transfer of the units during the restricted periods. The value of the Restricted Unit is established by the market price of the Common Unit on the date of grant. Restricted Units are subject to forfeiture in certain circumstances as defined in the 2000 Restricted Unit Plan. Compensation expense for the unvested awards is recognized ratably over the vesting periods and is net of estimated forfeitures.

During the first quarter of fiscal 2007, the Partnership awarded 34,759 Restricted Units under the 2000 Restricted Unit Plan at an aggregate grant date fair value of $1,263. Following is a summary of activity in the 2000 Restricted Unit Plan during fiscal 2007:

			Units						Weighted Average Grant Date Fair Value Per Unit
Outstanding September 30, 2006					340,786					$	28.84
Awarded					34,759						36.33
Forfeited					(1,506	)					33.20
Issued					(58,531	)					28.45
Outstanding December 30, 2006					315,508					$	30.20

As of December 30, 2006, there was $4,694 of total unrecognized compensation cost related to unvested Common Units awarded under the 2000 Restricted Unit Plan. Compensation cost associated with the unvested awards is expected to be recognized over a weighted-average period of 1.4 years. Compensation expense for the 2000 Restricted Unit Plan for the three months ended December 30, 2006 and December 24, 2005 was $1,297 and $615, respectively.

Long-Term Incentive Plan.    The Partnership has a non-qualified, unfunded long-term incentive plan for officers and key employees (‘‘LTIP-2’’) which provides for payment, in the form of cash, of an

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award of equity-based compensation at the end of a three-year performance period. The level of compensation earned under LTIP-2 is based on the market performance of the Partnership’s Common Units on the basis of total return to Unitholders (‘‘TRU’’) compared to the TRU of a predetermined peer group composed primarily of other Master Limited Partnerships, approved by the Compensation Committee of the Board of Supervisors, over the same three-year performance period. As a result of the quarterly remeasurement of the liability for awards under LTIP-2, compensation expense for the three months ended December 30, 2006 was $1,490. As a result of the performance at the end of the first quarter of fiscal 2006, the Partnership recorded a reversal of compensation expense in the amount of ($771) for the three months ended December 24, 2005. As of December 30, 2006 and September 30, 2006, the Partnership had a liability included within other current liabilities of $2,296 and $2,021, respectively, related to estimated future payments under LTIP-2.

11.	Commitments and Contingencies

Self-Insurance.    The Partnership is self-insured for general and product, workers’ compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. As of December 30, 2006 and September 30, 2006, the Partnership had accrued insurance liabilities of $54,946 and $45,413, respectively, representing the total estimated losses under these self-insurance programs. For the portion of the estimated self-insurance liability that exceeds insurance deductibles, the Partnership records an asset within other assets related to the amount of the liability expected to be covered by insurance which amounted to $16,665 and $8,665 as of December 30, 2006 and September 30, 2006, respectively. The Partnership is also involved in various legal actions that have arisen in the normal course of business, including those relating to commercial transactions and product liability. Management believes, based on the advice of legal counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Partnership’s financial position or future results of operations, after considering its self-insurance liability for known and unasserted self-insurance claims.

Environmental.    The Partnership is subject to various federal, state and local environmental, health and safety laws and regulations. Generally, these laws impose limitations on the discharge of pollutants and establish standards for the handling of solid and hazardous wastes. These laws include the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act (‘‘CERCLA’’), the Clean Air Act, the Occupational Safety and Health Act, the Emergency Planning and Community Right to Know Act, the Clean Water Act and comparable state statutes. CERCLA, also known as the ‘‘Superfund’’ law, imposes joint and several liability without regard to fault or the legality of the original conduct on certain classes of persons that are considered to have contributed to the release or threatened release of a ‘‘hazardous substance’’ into the environment. Propane is not a hazardous substance within the meaning of CERCLA. However, the Partnership owns real property where such hazardous substances may exist.

The Partnership is also subject to various laws and governmental regulations concerning environmental matters and expects that it will be required to expend funds to participate in the remediation of certain sites, including sites where it has been designated by the Environmental Protection Agency as a potentially responsible party under CERCLA and at sites with aboveground and underground fuel storage tanks.

With the acquisition of the assets of Agway Energy during the first quarter of fiscal 2004, the Partnership acquired certain surplus properties with either known or probable environmental exposure, some of which are currently in varying stages of investigation, remediation or monitoring. Additionally, the Partnership identified that certain active sites acquired contained environmental conditions which may require further investigation, future remediation or ongoing monitoring activities. The environmental exposures include instances of soil and/or groundwater contamination associated with the handling and storage of fuel oil, gasoline and diesel fuel.

As of December 30, 2006 and September 30, 2006, the Partnership had accrued environmental liabilities of $4,433 and $4,786, respectively, representing the total estimated future liability for remediation and monitoring. For the portion of the estimated environmental liability that is expected

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to be recoverable under state environmental reimbursement funds, the Partnership records an asset within other assets related to the amount of the liability expected to be reimbursed by state agencies, which amounted to $1,294 as of December 30, 2006 and September 30, 2006.

Estimating the extent of the Partnership’s responsibility at a particular site, and the method and ultimate cost of remediation of that site, requires making numerous assumptions. As a result, the ultimate cost to remediate any site may differ from current estimates, and will depend, in part, on whether there is additional contamination, not currently known to the Partnership, at that site. However, management believes that the Partnership’s past experience provides a reasonable basis for estimating these liabilities. As additional information becomes available, estimates are adjusted as necessary. While management does not anticipate that any such adjustment would be material to the Partnership’s financial statements, the result of ongoing or future environmental studies or other factors could alter this expectation and require recording additional liabilities. Management currently cannot determine whether the Partnership will incur additional liabilities or the extent or amount of any such liabilities.

Future developments, such as stricter environmental, health or safety laws and regulations thereunder, could affect the Partnership’s operations. Management does not anticipate that the cost of the Partnership’s compliance with environmental, health and safety laws and regulations, including CERCLA, as currently in effect and applicable to known sites will have a material adverse effect on the Partnership’s financial condition or results of operations. To the extent there are any environmental liabilities presently unknown to the Partnership or environmental, health or safety laws or regulations are made more stringent, however, there can be no assurance that the Partnership’s financial condition or results of operations will not be materially and adversely affected.

Legal Matters.    Following the Operating Partnership’s 1999 acquisition of the propane assets of SCANA Corporation (‘‘SCANA’’), Heritage Propane Partners, L.P. had brought an action against SCANA for breach of contract and fraud and against the Operating Partnership for tortious interference with contract and tortious interference with prospective contract. On October 21, 2004, the jury returned a unanimous verdict in favor of the Operating Partnership on all claims, but against SCANA. After the jury returned the verdict against SCANA, the Operating Partnership filed a cross-claim against SCANA for indemnification, seeking to recover defense costs. On November 2, 2006, SCANA and the Operating Partnership reached a settlement agreement wherein the Operating Partnership received $2,000 as a reimbursement of defense costs incurred as a result of the lawsuit. For the three months ended December 30, 2006, the $2,000 was recorded as a reduction to general and administrative expenses.

12.	Guarantees

The Partnership has residual value guarantees associated with certain of its operating leases, related primarily to transportation equipment, with remaining lease periods scheduled to expire periodically through fiscal 2014. Upon completion of the lease period, the Partnership guarantees that the fair value of the equipment will equal or exceed the guaranteed amount, or the Partnership will pay the lessor the difference. Although the equipment’s fair value at the end of their lease terms has historically exceeded the guaranteed amounts, the maximum potential amount of aggregate future payments the Partnership could be required to make under these leasing arrangements, assuming the equipment is deemed worthless at the end of the lease term, is approximately $16,055. Of this amount, the fair value of residual value guarantees for operating leases entered into after December 31, 2002 was $9,445 and $8,320 as of December 30, 2006 and September 30, 2006, respectively, which is reflected in other liabilities, with a corresponding amount included within other assets, in the accompanying condensed consolidated balance sheets.

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13.	Pension Plans and Other Postretirement Benefits

The following table provides the components of net periodic benefit costs for the three months ended December 30, 2006 and December 24, 2005:

			Pension Benefits												Postretirement Benefits
			Three Months Ended												Three Months Ended
			December 30, 2006						December 24, 2005						December 30, 2006						December 24, 2005
Service cost				$	—					$	—					$	3					$	4
Interest cost					2,226						2,287						329						422
Expected return on plan assets					(2,579	)					(2,565	)					—						—
Amortization of prior service costs					—						—						(149	)					(180	)
Recognized net actuarial loss					1,329						1,617						—						—
Net periodic benefit cost				$	976					$	1,339					$	183					$	246

There are no projected minimum employer contribution requirements under Internal Revenue Service Regulations for fiscal 2007 under our defined benefit pension plan. The projected annual contribution requirements related to the Partnership’s postretirement health care and life insurance benefit plan for fiscal 2007 is $2,200, of which $411 has been contributed during the three months ended December 30, 2006.

14.	Segment Information

The Partnership manages and evaluates its operations in five reportable segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, HVAC and All Other. The chief operating decision maker evaluates performance of the operating segments using a number of performance measures, including gross margins and operating profit. Costs excluded from these profit measures are captured in Corporate and include corporate overhead expenses not allocated to the operating segments. Unallocated corporate overhead expenses include all costs of back office support functions that are reported as general and administrative expenses in the consolidated statements of operations. In addition, certain costs associated with field operations support that are reported in operating expenses in the consolidated statements of operations, including purchasing, training and safety, are not allocated to the individual operating segments. Thus, operating profit for each operating segment includes only the costs that are directly attributable to the operations of the individual segment. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies Note in the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

The propane segment is primarily engaged in the retail distribution of propane to residential, commercial, industrial and agricultural customers and, to a lesser extent, wholesale distribution to large industrial end users. In the residential and commercial markets, propane is used primarily for space heating, water heating, cooking and clothes drying. Industrial customers use propane generally as a motor fuel burned in internal combustion engines that power over-the-road vehicles, forklifts and stationary engines, to fire furnaces and as a cutting gas. In the agricultural markets, propane is primarily used for tobacco curing, crop drying, poultry brooding and weed control.

The fuel oil and refined fuels segment is primarily engaged in the retail distribution of fuel oil, diesel, kerosene and gasoline to residential and commercial customers for use primarily as a source of heat in homes and buildings.

The natural gas and electricity segment is engaged in the marketing of natural gas and electricity to residential and commercial customers in the deregulated energy markets of New York and Pennsylvania. Under this operating segment, the Partnership owns the relationship with the end consumer and has agreements with the local distribution companies to deliver the natural gas or electricity from the Partnership’s suppliers to the customer.

The HVAC segment is engaged in the sale, installation and servicing of a wide variety of home comfort equipment and parts, particularly in the areas of heating, ventilation and air conditioning. In

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furtherance of the Partnership’s efforts to restructure its field operations and to focus on its core operating segments, during fiscal 2006 the Partnership initiated plans to streamline the HVAC service offerings by significantly reducing installation activities and focusing on service offerings that support the Partnership’s existing customer base within its propane, refined fuels and natural gas and electricity segments.

The all other business segment includes activities from the HomeTown Hearth & Grill and Suburban Franchising subsidiaries.

The following table presents certain data by reportable segment and provides a reconciliation of total operating segment information to the corresponding consolidated amounts for the periods presented:

			Three Months Ended
			December 30, 2006						December 24, 2005
Revenues:
Propane				$	286,879					$	310,292
Fuel oil and refined fuels					68,870						105,305
Natural gas and electricity					22,745						37,943
HVAC					18,459						31,227
All other					2,034						2,696
Total revenues				$	398,987					$	487,463
Income before interest expense and income taxes:
Propane				$	62,808					$	47,797
Fuel oil and refined fuels					10,806						15,372
Natural gas and electricity					3,279						2,592
HVAC					1,044						1,034
All other					(86	)					(569	)
Corporate					(14,221	)					(17,294	)
Total income before interest expense and income taxes					63,630						48,932
Reconciliation to income from continuing operations:
Interest expense, net					9,216						10,567
Provision for income taxes					762						150
Income from continuing operations				$	53,652					$	38,215
Depreciation and amortization:
Propane				$	4,391					$	5,228
Fuel oil and refined fuels					881						1,165
Natural gas and electricity					222						183
HVAC					105						141
All other					32						63
Corporate					1,505						1,431
Total depreciation and amortization				$	7,136					$	8,211

			As of
			December 30, 2006						September 30, 2006
Assets:
Propane				$	774,341					$	732,784
Fuel oil and refined fuels					105,904						92,173
Natural gas and electricity					33,714						22,644
HVAC					7,779						8,353
All other					2,654						2,719
Corporate					160,753						183,194
Eliminations					(87,981	)					(87,981	)
Total assets				$	997,164					$	953,886

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15.	Recently Issued Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (‘‘FASB’’) issued SFAS No. 157, ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It also establishes a fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability. SFAS 157 will be effective September 28, 2008, the beginning of the Partnership’s fiscal 2009. The Partnership is currently in the process of evaluating the impact that SFAS 157 may have on its consolidated financial position, results of operations and cash flows.

Also in September 2006, the FASB issued SFAS No. 158, ‘‘Employers’’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 103 and 132R’’ (‘‘SFAS 158’’). SFAS 158 requires companies to recognize the funded status of pension and other postretirement benefit plans on sponsoring employers’ balance sheets and to recognize changes in the funded status in the year the changes occur. It also requires the measurement date of plan assets and obligations to occur at the end of the employers’ fiscal year. SFAS 158 is effective as of the end of our fiscal 2007. Based on the Partnership’s funded status and the consolidated balance sheet recognition as of September 30, 2006 (as disclosed in Note 12 to the Consolidated Financial Statements included in the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006), adoption of SFAS 158 is not expected to have a significant impact on the Partnership’s consolidated financial position since the accrued pension liability already reflects the funded status of the defined benefit pension plan. The actual impact from the adoption of SFAS 158 on the consolidated financial statements for the year ending September 29, 2007 will differ due to changes in economic assumptions such as discount rates, measurement of fair values of plan assets and other possible changes in actuarial assumptions that may occur in connection with the upcoming fiscal 2007 measurement date.

In June 2006, the FASB issued FASB Interpretation No. 48, ‘‘Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109’’ (‘‘FIN 48’’). FIN 48 requires companies to determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006 which is the beginning of the Partnership’s fiscal 2008. The Partnership is currently in the process of assessing the impact that FIN 48 will have on its consolidated financial statements and currently does not expect that adoption of FIN 48 will have a material impact on its financial position, results of operation or cash flows.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the financial condition and results of operations of the Partnership as of and for the three months ended December 30, 2006. The discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the historical consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

The following are factors that regularly affect our operating results and financial condition. In addition, our business is subject to the risks and uncertainties described in Item 1A included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

Product Costs

The level of profitability in the retail propane, fuel oil, natural gas and electricity businesses is largely dependent on the difference between retail sales price and product cost. The unit cost of our products, particularly propane, fuel oil and natural gas, is subject to volatility as a result of product supply or other market conditions, including, but not limited to, economic and political factors impacting crude oil and natural gas supply or pricing. Product cost changes can occur rapidly over a short period of time and can impact profitability. There is no assurance that we will be able to pass on product cost increases fully or immediately, particularly when product costs increase rapidly. Therefore, average retail sales prices can vary significantly from year to year as product costs fluctuate with propane, fuel oil, crude oil and natural gas commodity market conditions. In addition, in periods of sustained higher commodity prices, as was experienced over the past two fiscal years, retail sales volumes may be negatively impacted by customer conservation efforts.

Seasonality

The retail propane and fuel oil distribution businesses, as well as the natural gas marketing business, are seasonal because of the primary use for heating in residential and commercial buildings. Historically, approximately two-thirds of our retail propane volume is sold during the six-month peak heating season from October through March. The fuel oil business tends to experience greater seasonality given its more limited use for space heating and approximately three-fourths of our fuel oil volumes are sold between October and March. Consequently, sales and operating profits are concentrated in our first and second fiscal quarters. Cash flows from operations, therefore, are greatest during the second and third fiscal quarters when customers pay for product purchased during the winter heating season. We expect lower operating profits and either net losses or lower net income during the period from April through September (our third and fourth fiscal quarters). To the extent necessary, we will reserve cash from the second and third quarters for distribution to holders of our Common Units in the first and fourth fiscal quarters.

Weather

Weather conditions have a significant impact on the demand for our products, in particular propane, fuel oil and natural gas, for both heating and agricultural purposes. Many of our customers rely heavily on propane, fuel oil or natural gas as a heating source. Accordingly, the volume sold is directly affected by the severity of the winter weather in our service areas, which can vary substantially from year to year. In any given area, sustained warmer than normal temperatures will tend to result in reduced propane, fuel oil and natural gas consumption, while sustained colder than normal temperatures will tend to result in greater use.

Risk Management

Product supply contracts are generally one-year agreements subject to annual renewal and generally permit suppliers to charge posted market prices (plus transportation costs) at the time of delivery or the current prices established at major delivery points. Since rapid increases in the cost of

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propane or fuel oil may not be immediately passed on to retail customers, such increases could reduce profitability. We engage in risk management activities to reduce the effect of price volatility on our product costs and to ensure the availability of product during periods of short supply. We are currently a party to propane and fuel oil futures contracts traded on the New York Mercantile Exchange (‘‘NYMEX’’) and enter into forward and option agreements with third parties to purchase and sell propane at fixed prices in the future. Risk management activities are monitored by an internal Commodity Risk Management Committee, made up of five members of management, through enforcement of our Hedging and Risk Management Policy and reported to our Audit Committee. We experienced additional margin opportunities from our hedging and risk management activities during the first quarter of fiscal 2007 arising from the declining commodities markets. However, risk management transactions may not always result in increased product margins. See Item 3 of this Quarterly Report.

Critical Accounting Policies and Estimates

Our significant accounting policies are summarized in Note 2, ‘‘Summary of Significant Accounting Policies,’’ included within the Notes to Consolidated Financial Statements section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

Certain amounts included in or affecting our consolidated financial statements and related disclosures must be estimated, requiring management to make certain assumptions with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. The preparation of financial statements in conformity with generally accepted accounting principles (‘‘GAAP’’) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We are also subject to risks and uncertainties that may cause actual results to differ from estimated results. Estimates are used when accounting for depreciation and amortization of long-lived assets, employee benefit plans, self-insurance and litigation reserves, environmental reserves, allowances for doubtful accounts, asset valuation assessments and valuation of derivative instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known to us. We believe that the following are our critical accounting estimates:

Allowances for Doubtful Accounts.    We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We estimate our allowances for doubtful accounts using a specific reserve for known or anticipated uncollectible accounts, as well as an estimated reserve for potential future uncollectible accounts taking into consideration our historical write-offs. If the financial condition of one or more of our customers were to deteriorate resulting in an impairment in their ability to make payments, additional allowances could be required.

Pension and Other Postretirement Benefits.    We estimate the rate of return on plan assets, the discount rate to estimate the present value of future benefit obligations and the cost of future health care benefits in determining our annual pension and other postretirement benefit costs. In accordance with GAAP, actual results that differ from our assumptions are accumulated and amortized over future periods and therefore, generally affect our recognized expense and recorded obligation in such future periods. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in market conditions may materially affect our pension and other postretirement benefit obligations and our future expense.

Self-Insurance Reserves.    Our accrued insurance reserves represent the estimated costs of known and anticipated or unasserted claims under our general and product, workers’ compensation and automobile insurance policies. Accrued insurance provisions for unasserted claims arising from unreported incidents are based on an analysis of historical claims data. For each claim, we record a

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self-insurance provision up to the estimated amount of the probable claim utilizing actuarially determined loss development factors applied to actual claims data. Our self-insurance provisions are susceptible to change to the extent that actual claims development differs from historical claims development. We maintain insurance coverage wherein our net exposure for insured claims is limited to the insurance deductible, claims above which are paid by our insurance carriers. For the portion of our estimated self-insurance liability that exceeds our deductibles, we record an asset related to the amount of the liability expected to be paid by the insurance companies.

Environmental Reserves.    We establish reserves for environmental exposures when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based upon our evaluation of costs associated with environmental remediation and ongoing monitoring activities. Inherent uncertainties exist in such evaluations due to unknown conditions and changing laws and regulations. These liabilities are adjusted periodically as remediation efforts progress, or as additional technical or legal information becomes available. Accrued environmental reserves are exclusive of claims against third parties, and an asset is established where contribution or reimbursement from such third parties, such as governmental agencies, has been agreed and we are reasonably assured of receiving such contribution or reimbursement. Environmental reserves are not discounted.

Goodwill Impairment Assessment.    We assess the carrying value of goodwill at a reporting unit level, at least annually, based on an estimate of the fair value of each reporting unit. Fair value of the reporting unit is estimated using discounted cash flow analyses taking into consideration estimated cash flows in a ten-year projection period and a terminal value calculation at the end of the projection period.

Derivative Instruments and Hedging Activities.    See Item 3 of this Quarterly Report for information about accounting for derivative instruments and hedging activities.

Executive Overview of Results of Operations and Financial Condition

Despite significantly warmer than normal temperatures experienced during the first quarter of fiscal 2007, particularly during December 2006 (the most critical heating month for the quarter), we reported an improvement in net income and EBITDA compared to the prior year first quarter. Net income of $54.7 million, or $1.70 per Common Unit, increased $16.5 million (43.2%) compared to $38.2 million, or $1.15 per Common Unit, in the prior year quarter. EBITDA (as defined and reconciled below) amounted to $71.8 million for the three months ended December 30, 2006, an increase of $14.7 million (25.7%) compared to EBITDA of $57.1 million for the three months ended December 24, 2005.

The improvement in year-over-year quarterly earnings continues to reflect the benefits of our field realignment efforts which began during the fourth quarter of fiscal 2005 and continued throughout fiscal 2006, as well as from the steps taken in the second half of fiscal 2006 to restructure our HVAC segment. The benefits of these restructuring efforts continue to favorably impact our cost structure as the full-year effect of the operating efficiencies, lower headcount and lower vehicle expenditures are expected to continue throughout much of fiscal 2007. As a result, operating expenses of $84.1 million for the three months ended December 30, 2006 were $16.2 million, or 16.2%, lower than the first quarter of fiscal 2006, more than offsetting the impact of the warmer weather.

Average degree days in our service territories were 87% of normal for the three months ended December 30, 2006 compared to 95% of normal in the prior year quarter, and average temperatures in the month of December 2006 were 81% of normal compared to 106% of normal during December of the prior year. In the commodities markets, with the recent decline in crude oil prices from their peak levels in the summer of 2006 and lower demand due to the warmer temperatures, propane and fuel oil prices began a steady decline in September 2006 which continued throughout the first quarter of fiscal 2007. Average posted prices of propane and fuel oil during the first quarter of fiscal 2007 declined 10% and 5%, respectively, compared to the average posted prices in the prior year first quarter, and declined 14% and 12%, respectively, from the peak levels during the fiscal 2006 fourth quarter.

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Propane volumes decreased 9.0% during the first quarter of fiscal 2007 compared to the prior year quarter primarily as a result of the warmer average temperatures, while fuel oil and refined fuels volumes declined 34.9% from a combination of warmer temperatures and, to a large extent, our decision to exit the majority of the gasoline and diesel businesses. The impact of lower volumes was offset to an extent by higher average margins from an improved customer mix, as well as from additional margin opportunities under our hedging and risk management strategy during the first quarter of fiscal 2007 from the declining commodities markets.

Looking ahead to the remainder of fiscal 2007, we expect that our operating results will continue to be impacted favorably by the full-year effect of cost savings and efficiencies from our field and HVAC reorganization efforts, regardless of the weather. The unseasonably warm weather experienced during much of the first quarter persisted into the first two weeks of January 2007, particularly in our operations on the east coast, yet shifted to more seasonable temperatures in the second half of the month. A return to a more seasonable weather pattern during the second quarter of fiscal 2007 would be expected to mitigate a portion of the negative effects on volumes sold from the significantly warmer than normal temperatures during the first quarter of fiscal 2007. Our efforts to focus on the areas within our control are ongoing as we continue to position our core operating segments for future growth opportunities.

From a cash flow perspective, the improvement in earnings during the first quarter of fiscal 2007 compared to the prior year quarter, combined with our cash on hand at the end of fiscal 2006, have funded our working capital requirements during the peak heating season. As a result, there have been no borrowings under the working capital facility of our Revolving Credit Agreement during the first quarter of fiscal 2007 and we ended the quarter with more than $26.0 million in cash on hand. On the strength of these fiscal 2007 first quarter earnings, among other factors, our Board of Supervisors declared the twelfth increase (since 1999) in our quarterly distribution from $0.6625 to $0.6875 per Common Unit. This increase equates to $0.10 per Common Unit annualized to $2.75 per Common Unit, an increase of 12% since the first quarter of the prior year.

Our anticipated cash requirements for the remainder of fiscal 2007 include: (i) maintenance and growth capital expenditures of approximately $16.8 million; (ii) interest payments of approximately $19.3 million; and (iii) cash distributions of approximately $67.4 million to our Common Unitholders based on the most recently increased quarterly distribution rate of $0.6875 per Common Unit. Based on our current estimates of cash flow from operations, our cash position at the end of the first quarter of fiscal 2007 and availability under the Revolving Credit Agreement (unused borrowing capacity under the working capital facility of $125.9 million after considering outstanding letters of credit of $49.1 million as of December 30, 2006), we expect to have sufficient funds to meet our current and future obligations.

Results of Operations

Three Months Ended December 30, 2006 Compared to Three Months Ended December 24, 2005

Revenues

			Three Months Ended
(Dollars in thousands)			December 30, 2006						December 24, 2005						Decrease						Percent Decrease
Revenues
Propane				$	286,879					$	310,292					$	(23,413	)					(7.5	%)
Fuel oil and refined fuels					68,870						105,305						(36,435	)					(34.6	%)
Natural gas and electricity					22,745						37,943						(15,198	)					(40.1	%)
HVAC					18,459						31,227						(12,768	)					(40.9	%)
All other					2,034						2,696						(662	)					(24.6	%)
Total revenues				$	398,987					$	487,463					$	(88,476	)					(18.2	%)

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Total revenues decreased $88.5 million, or 18.2%, to $399.0 million for the three months ended December 30, 2006 compared to $487.5 million for the three months ended December 24, 2005, as a result of lower volumes across all business segments, offset to an extent by higher average selling prices. Volumes in our propane, fuel oil and refined fuels and natural gas and electricity segments were negatively affected during the first quarter of fiscal 2007 by unseasonably warm weather. Average temperatures in our service territories were 13% warmer than normal for the three months ended December 30, 2006 compared to 5% warmer than normal temperatures in the prior year quarter, and average temperatures in the month of December 2006 were 19% warmer than normal compared to 6% colder than normal during December of the prior year.

Revenues from the distribution of propane and related activities of $286.9 million in the first quarter of fiscal 2007 decreased $23.4 million, or 7.5%, compared to $310.3 million in the prior year quarter, primarily due to lower volumes attributable primarily to warm weather in the first quarter of fiscal 2007, offset to an extent by slightly higher average selling prices. Retail propane gallons sold in the first quarter of fiscal 2007 decreased 12.0 million gallons, or 9.0%, to 121.8 million gallons from 133.8 million gallons in the prior year quarter. Propane volumes sold were negatively affected by the warmer than normal temperatures, particularly during the month of December 2006. The average posted price of propane during the first quarter of fiscal 2007 decreased approximately 10% compared to the average posted prices in the prior year quarter. However, average propane selling prices in the first quarter of fiscal 2007 increased 3.5% compared to the prior year quarter. Additionally, included within the propane segment are revenues from wholesale and risk management activities of $19.4 million for the three months ended December 30, 2006 which decreased $5.0 million compared to the prior year quarter.

Revenues from the distribution of fuel oil and refined fuels of $68.9 million in the first quarter of fiscal 2007 decreased $36.4 million, or 34.6%, from $105.3 million in the prior year quarter. Sales of fuel oil and refined fuels amounted to 28.5 million gallons during the first quarter of fiscal 2007 compared to 43.8 million gallons in the prior year quarter, a decrease of 15.3 million gallons, or 34.9%. Lower volumes in our fuel oil and refined fuels segment were attributable primarily to our decision to exit certain lower margin diesel and gasoline businesses combined with the impact of the significantly warmer than normal temperatures. Our decision to exit the majority of our low sulfur diesel and gasoline businesses resulted in a reduction in volumes in the fuel oil and refined fuels segment of approximately 7.1 million gallons, or 46.4% of the total volume decline, in the first quarter of fiscal 2007 compared to the prior year first quarter. Average selling prices in our fuel oil and refined fuels segment were relatively flat in the first quarter of fiscal 2007 compared to the prior year first quarter primarily as a result of an improved customer mix from our decreased emphasis on lower priced diesel and gasoline businesses, offset by lower commodity prices. The average posted price of fuel oil during the first quarter of fiscal 2007 decreased approximately 5% compared to the average posted prices in the prior year quarter.

Revenues in our natural gas and electricity segment decreased $15.2 million, or 40.1%, to $22.7 million for the three months ended December 30, 2006 compared to $37.9 million in the prior year quarter as a result of lower electricity and natural gas volumes attributable to warmer temperatures coupled with lower average selling prices in line with declining commodity prices. Revenues in our HVAC segment decreased 40.9% to $18.5 million in the first quarter of fiscal 2007 from $31.2 million in the prior year quarter as a result of the decision during the third quarter of fiscal 2006 to reorganize the HVAC segment and to reduce the level of HVAC installation activities. The focus of our ongoing service offerings will be in support of our existing core commodity segments, thus reducing overall HVAC segment revenues.

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Cost of Products Sold

			Three Months Ended
(Dollars in thousands)			December 30, 2006						December 24, 2005						Decrease						Percent Decrease
Cost of products sold
Propane				$	158,473					$	190,011					$	(31,538	)					(16.6	%)
Fuel oil and refined fuels					47,457						78,670						(31,213	)					(39.7	%)
Natural gas and electricity					18,304						33,968						(15,664	)					(46.1	%)
HVAC					5,677						11,836						(6,159	)					(52.0	%)
All other					963						1,358						(395	)					(29.1	%)
Total cost of products sold				$	230,874					$	315,843					$	(84,969	)					(26.9	%)
As a percent of total revenues					57.9	%					64.8	%

The cost of products sold reported in the condensed consolidated statements of operations represents the weighted average unit cost of propane and fuel oil sold, as well as the cost of natural gas and electricity, including transportation costs to deliver product from our supply points to storage or to our customer service centers. Cost of products sold also includes the cost of appliances and related parts sold or installed by our customer service centers computed on a basis that approximates the average cost of the products. Changes in the fair value of derivative instruments that are not designated as hedges are recorded in current period earnings within cost of products sold. Cost of products sold is reported exclusive of any depreciation and amortization; these amounts are reported separately within the condensed consolidated statements of operations.

Cost of products sold decreased $85.0 million, or 26.9%, to $230.9 million for the three months ended December 30, 2006 compared to $315.8 million in the prior year quarter. The decrease results primarily from the lower sales volumes described above, combined with lower commodity prices for all products. Cost of products sold in the fiscal 2007 first quarter included a $1.0 million unrealized (non-cash) loss representing the net change in the fair value of derivative instruments during the period, compared to a $7.0 million unrealized (non-cash) gain in the prior year quarter resulting in an $8.0 million increase in cost of products sold for the three months ended December 30, 2006 compared to the prior year quarter (see Item 3 in this Quarterly Report for information on our policies regarding the accounting for derivative instruments).

Cost of products sold associated with the distribution of propane and related activities of $158.5 million decreased $31.5 million, or 16.6%, compared to the prior year quarter. Lower propane volumes resulted in a $14.9 million decrease in cost of products sold during the first quarter of fiscal 2007 compared to the prior year quarter, along with decreased propane product costs which had an impact of $7.9 million. Lower wholesale and risk management activities, noted above, decreased cost of products sold by $8.8 million compared to the prior year quarter.

Cost of products sold associated with our fuel oil and refined fuels segment of $47.5 million decreased $31.2 million, or 39.7%, compared to the prior year quarter. Lower sales volumes resulted in a $30.0 million decrease in cost of products sold during the first quarter of fiscal 2007 compared to the prior year quarter, along with lower commodity prices which had an impact of $2.0 million compared to the prior year quarter. Cost of products sold as a percentage of revenues in our fuel oil and refined fuels segment decreased from 74.7% during the first quarter of fiscal 2006 to 68.9% in the first quarter of fiscal 2007 primarily as a result of the aforementioned improvement in product mix resulting from our exit from certain lower margin diesel and gasoline businesses.

The decrease in revenues attributable to our natural gas and electricity segment had a $15.7 million impact on cost of products sold for the three months ended December 30, 2006 compared to the prior year quarter. Cost of products sold in our HVAC segment declined $6.2 million, or 52.0%, as a result of lower revenues.

For the quarter ended December 30, 2006, total cost of products sold represented 57.9% of revenues compared to 64.8% in the prior year quarter. This decrease results primarily from the efforts

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we have taken to eliminate lower margin business in the propane and refined fuels segments, as well as from additional margin opportunities from our wholesale and risk management activities during the first quarter of fiscal 2007 arising from the declining commodities markets.

Operating Expenses

			Three Months Ended
(Dollars in thousands)			December 30, 2006						December 24, 2005						Decrease						Percent Decrease
Operating expenses				$	84,060					$	100,261					$	(16,201	)					(16.2	%)
As a percent of total revenues					21.1	%					20.6	%

All costs of operating our retail distribution and appliance sales and service operations are reported within operating expenses in the condensed consolidated statements of operations. These operating expenses include the compensation and benefits of field and direct operating support personnel, costs of operating and maintaining our vehicle fleet, overhead and other costs of our purchasing, training and safety departments and other direct and indirect costs of our customer service centers.

Operating expenses of $84.1 million for the three months ended December 30, 2006 decreased $16.2 million, or 16.2%, compared to $100.3 million in the prior year quarter, primarily from the benefits of our field realignment efforts which began during the fourth quarter of fiscal 2005 and continued throughout fiscal 2006, as well as from the steps taken in the second half of fiscal 2006 to restructure our HVAC segment. These efforts have significantly restructured our operating footprint and reduced our cost structure through the elimination of more than 400 positions, as well as through the creation of routing efficiencies which has allowed us to reduce our fleet by nearly 750 vehicles. As a result, payroll and benefit related expenses declined $10.2 million and savings in other operating expenses were $5.4 million. In addition, bad debt expense decreased $0.6 million.

General and Administrative Expenses

			Three Months Ended
(Dollars in thousands)			December 30, 2006						December 24, 2005						Decrease						Percent Decrease
General and administrative expenses				$	12,902					$	14,216					$	(1,314	)					(9.2	%)
As a percent of total revenues					3.2	%					2.9	%

All costs of our back office support functions, including compensation and benefits for executives and other support functions, as well as other costs and expenses to maintain finance and accounting, treasury, legal, human resources, corporate development and the information systems functions are reported within general and administrative expenses in the condensed consolidated statements of operations.

General and administrative expenses of $12.9 million for the three months ended December 30, 2006 decreased $1.3 million, or 9.2%, compared to $14.2 million during the prior year quarter. The decrease was primarily attributable to $2.8 million lower professional services fees, offset by higher variable compensation in line with improved earnings. In addition, general and administrative expenses for the three months ended December 30, 2006 included a $2.0 million gain from our recovery of a substantial portion of legal fees previously incurred in connection with our successful defense of a matter following the 1999 acquisition of certain propane assets from SCANA in North and South Carolina (see Note 11).

Restructuring Costs.    For the three months ended December 30, 2006, we recorded a restructuring charge of $0.4 million related primarily to employee termination costs incurred as a result of further refinements to our plan to restructure our HVAC business segment.

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Depreciation and Amortization

			Three Months Ended
(Dollars in thousands)			December 30, 2006						December 24, 2005						Decrease						Percent Decrease
Depreciation and amortization				$	7,136					$	8,211					$	(1,075	)					(13.1	%)
As a percent of total revenues					1.8	%					1.7	%

Depreciation and amortization expense decreased $1.1 million, or 13.1%, to $7.1 million for the three months ended December 30, 2006, compared to $8.2 million in the prior year quarter as a result of lower depreciation attributable to asset retirements.

Interest Expense, net

			Three Months Ended
(Dollars in thousands)			December 30, 2006						December 24, 2005						Decrease						Percent Decrease
Interest expense, net				$	9,216					$	10,567					$	(1,351	)					(12.8	%)
As a percent of total revenues					2.3	%					2.2	%

Net interest expense decreased $1.4 million, or 12.8%, to $9.2 million for the three months ended December 30, 2006, compared to $10.6 million in the prior year quarter. The decrease results primarily from lower average amounts outstanding under our working capital facility during the first quarter of fiscal 2007. During the first quarter of fiscal 2007, there were no borrowings under our working capital facility as seasonal working capital needs have been funded through improved cash flow and cash on hand at the end of fiscal 2006, resulting in lower interest expense. In the prior year first quarter, we ended the quarter with $63.0 million outstanding under our working capital facility.

Net Income and EBITDA.    Net income for the three months ended December 30, 2006 amounted to $54.7 million, an improvement of $16.5 million, or 43.2%, compared to the prior year quarter net income of $38.2 million. EBITDA also improved to $71.8 million for the three months ended December 30, 2006 compared to an EBITDA (as defined below) in the prior year quarter of $57.1 million. Our net income and EBITDA improved, despite lower sales volumes in all operating segments, primarily as a result of our efforts to streamline the operating footprint, implement operating efficiencies and identify cost savings opportunities from our internal focus on our field realignment.

EBITDA represents net income before deducting interest expense, income taxes, depreciation and amortization. Our management uses EBITDA as a measure of liquidity and we are including it because we believe that it provides our investors and industry analysts with additional information to evaluate our ability to meet our debt service obligations and to pay our quarterly distributions to holders of our Common Units. In addition, certain of our incentive compensation plans covering executives and other employees utilize EBITDA as the performance target. Moreover, our Revolving Credit Agreement requires us to use EBITDA as a component in calculating our leverage and interest coverage ratios. EBITDA is not a recognized term under GAAP and should not be considered as an alternative to net income or net cash used in operating activities determined in accordance with GAAP. Because EBITDA as determined by us excludes some, but not all, items that affect net income, it may not be comparable to EBITDA or similarly titled measures used by other companies.

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The following table sets forth (i) our calculations of EBITDA and (ii) a reconciliation of EBITDA, as so calculated, to our net cash used in operating activities:

			Three Months Ended
(Dollars in thousands)			December 30, 2006						December 24, 2005
Net income				$	54,654					$	38,215
Add:
Provision for income taxes					762						150
Interest expense, net					9,216						10,567
Depreciation and amortization					7,136						8,211
EBITDA					71,768						57,143
Add/(subtract):
Provision for income taxes					(762	)					(150	)
Interest expense, net					(9,216	)					(10,567	)
Compensation cost recognized under Restricted Unit Plan					1,297						615
Gain on disposal of property, plant and equipment, net					(247	)					(44	)
Gain on exchange of customer service centers					(1,002	)					—
Changes in working capital and other assets and liabilities					(67,731	)					(55,929	)
Net cash (used in)/provided by
Operating activities				$	(5,893	)				$	(8,932	)
Investing activities				$	(6,663	)				$	(5,938	)
Financing activities				$	(21,637	)				$	17,088

Liquidity and Capital Resources

Analysis of Cash Flows

Operating Activities.    Due to the seasonal nature of the propane and fuel oil businesses, cash flows from operating activities are greater during the winter and spring seasons (our second and third fiscal quarters) as customers pay for products purchased during the heating season. For the three months ended December 30, 2006, net cash used by operating activities was $5.9 million improved $3.0 million compared to net cash used in operating activities of $8.9 million for the first three months of the prior year. The $3.0 million improvement in operating cash flows was attributable to a $14.8 million increase in earnings, after adjusting for non-cash items in both periods (depreciation, amortization and gains on disposal of assets), partially offset by an $11.8 million increased investment in working capital in comparison to the first quarter of the prior year. The increased investment in working capital was primarily attributable to the payment of variable compensation during the first quarter of fiscal 2007 following the fiscal 2006 earnings compared to lower variable compensation paid during the first quarter of the prior fiscal year in respect of fiscal 2005.

Investing Activities.    Net cash used in investing activities of $6.7 million for the three months ended December 30, 2006 consists of capital expenditures of $8.2 million (including $2.2 million for maintenance expenditures and $6.0 million to support the growth of operations), partially offset by the net proceeds from the sale of property, plant and equipment of $1.5 million. Net cash used in investing activities of $5.9 million for the three months ended December 24, 2005 consisted of capital expenditures of $6.2 million (including $1.8 million for maintenance expenditures and $4.4 million to support growth of operations), partially offset by the net proceeds from the sale of property, plant and equipment of $0.3 million.

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Financing Activities.    Net cash used in financing activities for the three months ended December 30, 2006 of $21.6 million reflects quarterly distributions to Common Unitholders at a rate of $0.6625 per Common Unit paid in respect of the fourth quarter of fiscal 2006. Net cash provided by financing activities for the three months ended December 24, 2005 of $17.1 million reflected borrowings of $36.3 million under our Revolving Credit Agreement in order to fund increased working capital needs during the fiscal 2006 heating season, offset by quarterly distributions of Common Unitholders and the General Partner at a rate of $0.6125 per Common Unit in respect of the fourth quarter of fiscal 2005 of $19.2 million.

Summary of Long-Term Debt Obligations and Revolving Credit Lines

Our long-term borrowings and revolving credit lines consist of $423.4 million in 6.875% senior notes due December 2013 (the ‘‘2003 Senior Notes’’) and a Revolving Credit Agreement at the Operating Partnership level which provides a five-year $125.0 million term loan due March 31, 2010 (the ‘‘Term Loan’’) and a separate working capital facility which provides available credit up to $175.0 million. There were no outstanding borrowings under the working capital facility as of December 30, 2006. We have standby letters of credit issued under the working capital facility of the Revolving Credit Agreement in the aggregate amount of $49.1 million in support of retention levels under our self-insurance programs and certain lease obligations. Therefore, as of December 30, 2006 we had available borrowing capacity of $125.9 million under the working capital facility of the Revolving Credit Agreement. Additionally, under the third amendment to the Revolving Credit Agreement our Operating Partnership is authorized to incur additional indebtedness of up to $10.0 million in connection with capital leases and up to $20.0 million in short-term borrowings during the period from December 1 to April 1 in each fiscal year in order to meet working capital needs during periods of peak demand, if necessary.

The 2003 Senior Notes mature on December 15, 2013 and require semi-annual interest payments. We are permitted to redeem some or all of the 2003 Senior Notes any time on or after December 15, 2008 at redemption prices specified in the indenture governing the 2003 Senior Notes. In addition, the 2003 Senior Notes have a change of control provision that would require us to offer to repurchase the notes at 101% of the principal amount repurchased, if the holders of the notes elected to exercise the right of repurchase. Borrowings under the Revolving Credit Agreement, including the Term Loan, bear interest at a rate based upon either LIBOR or Wachovia National Bank’s prime rate plus, in each case, the applicable margin. An annual facility fee ranging from 0.375% to 0.50%, based upon certain financial tests, is payable quarterly whether or not borrowings occur.

In connection with the Term Loan, our Operating Partnership also entered into an interest rate swap contract with a notional amount of $125.0 million with the issuing lender. Effective March 31, 2005 through March 31, 2010, our Operating Partnership will pay a fixed interest rate of 4.66% to the issuing lender on the notional principal amount of $125.0 million, effectively fixing the LIBOR portion of the interest rate at 4.66%. In return, the issuing lender will pay to our Operating Partnership a floating rate, namely LIBOR, on the same notional principal amount. The applicable margin above LIBOR, as defined in the Revolving Credit Agreement, will be paid in addition to this fixed interest rate of 4.66%.

Under the Revolving Credit Agreement, our Operating Partnership must maintain a leverage ratio (the ratio of total debt to EBITDA) of less than 4.0 to 1 and an interest coverage ratio (the ratio of EBITDA to interest expense) of greater than 2.5 to 1 at the Partnership level. The Revolving Credit Agreement and the 2003 Senior Notes both contain various restrictive and affirmative covenants applicable to our Operating Partnership and us, respectively. These covenants include (i) restrictions on the incurrence of additional indebtedness and (ii) restrictions on certain liens, investments, guarantees, loans, advances, payments, mergers, consolidations, distributions, sales of assets and other transactions. We were in compliance with all covenants and terms of all of our debt agreements as of December 30, 2006.

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Partnership Distributions

We will make distributions in an amount equal to all of our Available Cash, as defined in the Third Amended and Restated Partnership Agreement, approximately 45 days after the end of each fiscal quarter to holders of record on the applicable record dates. Available Cash, as defined in the Partnership Agreement, generally means all cash on hand at the end of the respective fiscal quarter less the amount of cash reserves established by the Board of Supervisors in its reasonable discretion for future cash requirements. These reserves are retained for the proper conduct of our business, the payment of debt principal and interest and for distributions during the next four quarters. The Board of Supervisors reviews the level of Available Cash on a quarterly basis based upon information provided by management. As a result of the GP Exchange Transaction, all IDRs held by the General Partner have been cancelled and the General Partner is not entitled to receive any cash distributions in respect of its general partner interest. Accordingly, beginning with the quarterly distribution paid on November 14, 2006 in respect of the fourth quarter of fiscal 2006, 100% of all cash distributions are paid to the holders of Common Units.

On January 25, 2007, we announced a quarterly distribution of $0.6875 per Common Unit, or $2.75 on an annualized basis, in respect of the first quarter of fiscal 2007 payable on February 13, 2007 to holders of record on February 6, 2007. This quarterly distribution included an increase of $0.025 per Common Unit, or $0.10 per Common Unit on an annualized basis, representing the twelfth increase since our recapitalization in 1999 and a 12% increase in the quarterly distribution rate since the first quarter of the prior year.

Debt Obligations and Other Commitments

The following table presents short-term and long-term debt obligations, cash interest and future minimum rental commitments due under noncancelable operating lease agreements as of December 30, 2006. For purposes of determining cash interest due under the Term Loan, a variable interest debt instrument, we have used the interest rate in effect as of December 30, 2006, taking into consideration the impact of the interest rate swap described above.

			Payments due by period
(Dollars in thousands)			Remainder of Fiscal 2007						Fiscal 2008						Fiscal 2009						Fiscal 2010						Fiscal 2011 and thereafter						Total
Short-term and long-term debt				$	—					$	—					$	—					$	125,000					$	423,362					$	548,362
Future interest payments					19,309						38,619						38,619						36,269						102,266						235,082
Operating leases					13,496						12,496						8,814						6,128						6,672						47,606
Total debt obligations, cash interest and lease commitments				$	32,805					$	51,115					$	47,433					$	167,397					$	532,300					$	831,050

We have a noncontributory, cash balance format, defined benefit pension plan which was frozen to new participants effective January 1, 2000. Effective January 1, 2003, the defined benefit pension plan was amended such that future service credits ceased and eligible employees would only receive interest credits toward their ultimate retirement benefit. At December 30, 2006, we had accrued pension obligations of $32.1 million. We also provide postretirement health care and life insurance benefits for certain retired employees under a plan that was also frozen to new participants effective January 1, 2000. At December 30, 2006, we had accrued retiree health and life benefits of $30.4 million. We are self-insured for general and product, workers’ compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. At December 30, 2006, we had accrued insurance liabilities of $38.3 million, net of a $16.7 million asset related to the amount of the liability expected to be covered by insurance carriers. Additionally, we have standby letters of credit in the aggregate amount of $49.1 million, in support of our casualty insurance coverage and certain lease obligations, which expire periodically through October 25, 2007.

Additionally, we have residual value guarantees associated with certain of our operating leases, related primarily to transportation equipment, with remaining lease periods scheduled to expire

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periodically through fiscal 2014. Upon completion of the lease period, we guarantee that the fair value of the equipment will equal or exceed the guaranteed amount, or we will pay the difference. Although the equipment’s fair value at the end of its lease term has historically exceeded the guaranteed amounts, the maximum potential amount of aggregate future payments we could be required to make under these leasing arrangements, assuming the equipment is deemed worthless at the end of the lease term, is approximately $16.1 million. Of this amount, the fair value of residual value guarantees for operating leases entered into after December 31, 2002 were $9.4 million and $8.3 million as of December 30, 2006 and September 30, 2006, respectively, which is reflected in other liabilities, with a corresponding amount included within other assets in the accompanying condensed consolidated balance sheets.

Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (‘‘FASB’’) issued Statement of Financial Accounting Standards (‘‘SFAS’’) No. 157, ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It also establishes a fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability. SFAS 157 will be effective September 28, 2008, the beginning of our fiscal 2009. We are currently in the process of evaluating the impact that SFAS 157 may have on our consolidated financial position, results of operations and cash flows.

Also in September 2006, the FASB issued SFAS No. 158, ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 103 and 132R’’ (‘‘SFAS 158’’). SFAS 158 requires companies to recognize the funded status of pension and other postretirement benefit plans on sponsoring employers’ balance sheets and to recognize changes in the funded status in the year the changes occur. It also requires the measurement date of plan assets and obligations to occur at the end of the employers’ fiscal year. SFAS 158 is effective as of the end of our fiscal 2007. Based on our funded status and the consolidated balance sheet recognition as of September 30, 2006 (as disclosed in Note 12 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006), adoption of SFAS 158 is not expected to have a significant impact on our consolidated financial position since the accrued pension liability already reflects the funded status of the defined benefit pension plan. The actual impact from the adoption of SFAS 158 on the consolidated financial statements for the year ending September 29, 2007 will differ due to changes in economic assumptions such as discount rates, measurement of fair values of plan assets and other possible changes in actuarial assumptions that may occur in connection with the upcoming fiscal 2007 measurement date.

In June 2006, the FASB issued FASB Interpretation No. 48, ‘‘Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109’’ (‘‘FIN 48’’). FIN 48 requires companies to determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006 which is the beginning of our fiscal 2008. We are currently in the process of assessing the impact that FIN 48 will have on our consolidated financial statements and currently do not expect that adoption of FIN 48 will have a material impact on our financial position, results of operation or cash flows.

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of December 30, 2006, we were a party to exchange-traded futures and option contracts, forward contracts and in certain instances, over-the-counter options (collectively ‘‘derivative instruments’’) to manage the price risk associated with future purchases of the commodities used in our operations, principally propane and fuel oil. Futures and forward contracts require that we sell or acquire propane or fuel oil at a fixed price at fixed future dates. An option contract allows, but does not require, its holder to buy or sell propane or fuel oil at a specified price during a specified time period. However, the writer of an option contract must fulfill the obligation of the option contract, should the holder choose to exercise the option. At expiration, the contracts are settled by the delivery of the product to the respective party or are settled by the payment of a net amount equal to the difference between the then current price and the fixed contract price. The contracts are entered into in anticipation of market movements and to manage and hedge exposure to fluctuating prices of propane and fuel oil, as well as to ensure the availability of product during periods of high demand.

Market Risk

We are subject to commodity price risk to the extent that propane or fuel oil market prices deviate from fixed contract settlement amounts. Futures traded with brokers of the NYMEX require daily cash settlements in margin accounts. Forward and option contracts are generally settled at the expiration of the contract term either by physical delivery or through a net settlement mechanism. Market risks associated with the trading of futures, options and forward contracts are monitored daily for compliance with our Hedging and Risk Management Policy which includes volume limits for open positions. Open inventory positions are reviewed and managed daily as to exposures to changing market prices.

Credit Risk

Futures and fuel oil options are guaranteed by the NYMEX and, as a result, have minimal credit risk. We are subject to credit risk with forward and propane option contracts to the extent the counterparties do not perform. We evaluate the financial condition of each counterparty with which we conduct business and establish credit limits to reduce exposure to credit risk of non-performance.

Interest Rate Risk

A portion of our long-term borrowings bear interest at a variable rate based upon either LIBOR or Wachovia National Bank’s prime rate, plus an applicable margin depending on the level of our total leverage. Therefore, we are subject to interest rate risk on the variable component of the interest rate. We manage our interest rate risk by entering into interest rate swap agreements. On March 31, 2005, we entered into a $125.0 million interest rate swap contract in conjunction with the Term Loan facility under the Revolving Credit Agreement. The interest rate swap is being accounted for under SFAS 133 and has been designated as a cash flow hedge. Changes in the fair value of the interest rate swap are recognized in other comprehensive income until the hedged item is recognized in earnings. At December 30, 2006, the fair value of the interest rate swap was $1.3 million representing an unrealized gain and is included within other assets.

Derivative Instruments and Hedging Activities

We account for derivative instruments in accordance with the provisions of SFAS 133. All derivative instruments are reported on the balance sheet, within other current assets or other current liabilities, at their fair values. Fair values for forward contracts and futures are derived from quoted market prices for similar instruments traded on the NYMEX. Fair values for option contracts are derived using generally accepted published option pricing models. On the date that futures, forward and option contracts are entered into, we make a determination as to whether the derivative instrument qualifies for designation as a hedge. Changes in the fair value of derivative instruments are recorded each period in current period earnings or OCI, depending on whether a derivative

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instrument is designated as a hedge and, if so, the type of hedge. For derivative instruments designated as cash flow hedges, we formally assess, both at the hedge contract’s inception and on an ongoing basis, whether the hedge contract is highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of derivative instruments designated as cash flow hedges are reported in OCI to the extent effective and reclassified into cost of products sold during the same period in which the hedged item affects earnings. The mark-to-market gains or losses on ineffective portions of hedges are recognized in cost of products sold immediately.

Changes in the fair value of derivative instruments that are not designated as hedges are recorded in current period earnings within cost of products sold. A portion of our option contracts are not classified as hedges and, as such, changes in the fair value of these derivative instruments are recognized within cost of products sold as they occur. The value of certain option contracts that do qualify as hedges and are designated as cash flow hedges under SFAS 133 have two components of value: time value and intrinsic value. The intrinsic value is the value by which the option is in the money (i.e., the amount by which the value of the commodity exceeds the exercise or ‘‘strike’’ price of the option). The remaining amount of option value is attributable to time value. We do not include the time value of option contracts in our assessment of hedge effectiveness and, therefore, record changes in the time value component of the options currently in earnings.

At December 30, 2006, the fair value of derivative instruments described above resulted in derivative assets (unrealized gains) of $9.0 million included within prepaid expenses and other current assets and derivative liabilities (unrealized losses) of $3.1 million included within other current liabilities. Cost of products sold included unrealized (non-cash) losses in the amount of $1.0 million for the three months ended December 30, 2006 compared to unrealized (non-cash) gains of $7.0 million for the three months ended December 24, 2005, attributable to the change in fair value of derivative instruments not designated as cash flow hedges. As of December 30, 2006, unrealized losses on derivative instruments designated as cash flow hedges in the amount of $2.0 million were included in OCI and are expected to be recognized in earnings during the next 12 months as the hedged transactions occur.

Sensitivity Analysis

In an effort to estimate our exposure to unfavorable market price changes in propane or fuel oil, a sensitivity analysis of open positions as of December 30, 2006 was performed. Based on this analysis, a hypothetical 10% adverse change in market prices for each of the future months for which a futures, forward and/or option contract exists indicates either a reduction in potential future gains or potential losses in future earnings of $5.5 million as of December 30, 2006. See also Item 7A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

The above hypothetical change does not reflect the worst case scenario. Actual results may be significantly different depending on market conditions and the composition of the open position portfolio at any given point in time.

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ITEM 4.	CONTROLS AND PROCEDURES

(a)    The Partnership maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be disclosed in the Partnership’s filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to the Partnership’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

The Partnership completed an evaluation under the supervision and with participation of the Partnership’s management, including the Partnership’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures as of December 30, 2006. Based on this evaluation, the Partnership’s principal executive officer and principal financial officer have concluded that as of December 30, 2006, such disclosure controls and procedures were effective to provide the reasonable assurance described above.

(b)    There have not been any changes in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) during the quarter ended December 30, 2006 that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

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PART II

ITEM 6.	EXHIBITS

(a)	Exhibits

	10	.1				Release and Waiver of All Claims, dated January 31, 2007, between Suburban Propane, L.P. and Jeffrey S. Jolly.
	10	.2				Employment Agreement, dated as of February 1, 2007, by and between Suburban Propane, L.P. and Michael J. Dunn, Jr.
	31	.1				Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
	31	.2				Rule 13a-14(a)/15d-14(a) Certification of the Vice President and Chief Financial Officer.
	32	.1				Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
	32	.2				Certification of the Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			SUBURBAN PROPANE PARTNERS, L.P.
February 8, 2007			By:   /s/ ROBERT M. PLANTE
Date			Robert M. Plante         Vice President and Chief Financial Officer
February 8, 2007			By:   /s/ MICHAEL A. STIVALA
Date			Michael A. Stivala         Controller and Chief Accounting Officer

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EX-10.1

RELEASE AND WAIVER OF ALL CLAIMS

THIS IS A RELEASE AND WAIVER OF CLAIMS (hereinafter referred to as “Release” or “Agreement”) made this 31^st day of January, 2007, by and between Suburban Propane, L.P. (including its subsidiaries and affiliates, and hereinafter referred to as "Company" or “Suburban”) having a principal place of business at 240 Route 10 West, P.O. Box 206, Whippany, New Jersey 07981-0206and Jeffrey S. Jolly residing at 12 Sierra Drive, Califon, New Jersey 07830 (hereinafter referred to as “Employee”).

IN CONSIDERATION of the covenants undertaken and the releases contained in this Release, the Employee and Suburban agrees as follows:

1.

DEFINITIONS.  As used in this Release, the following terms shall have the following meanings:

A.

“Severance Period” shall mean the eighteen (18) month period commencing on the Employment Termination Date (as defined below) and expiring on July 26, 2008.

B.

“Employment Termination Date” shall mean January 26, 2007.

C.

"LP-Gas, Fuel Oil or HVAC Business" shall mean any business engaged in the purchase, storage, distribution, sale or rental of liquefied petroleum gas, fuel oil, or related appliances and equipment; or engaged in the sale, installation or service of heating, ventilation and air conditioning appliances and equipment.

2.

SUBURBAN shall pay to the Employee severance in the amount of Three Hundred Thirty Thousand and 00/100 Dollars ($330,000.00) acknowledged to be equivalent to eighteen (18) months’ base salary, less standard withholding and authorized

deductions.  The foregoing amount shall be paid in accordance with prevailing payroll practices of Suburban. Participation in Suburban’s 401(k) and pension plans shall not continue during the Severance Period. In further consideration of this Release and Waiver of All Claims:

A.

Suburban shall continue to pay Suburban medical and dental benefit coverage of the Employee and his/her immediate family under a COBRA arrangement at Suburban’s expense up until the earlier of (a) the expiration of the Severance Period or (b) institution of coverage of the Employee under another Plan. The Employee’s COBRA eligibility shall commence upon the Employment Termination Date.

B.

The Employee shall be eligible to participate in Suburban’s Incentive Compensation Plan for the fiscal year which commenced on or about October 1, 2006 (hereinafter, “Fiscal Year 2007”). It is agreed that if a Fiscal Year 2007 Incentive Award is earned, it shall be paid to the Employee in December 2007 at the full-year rate with no pro-ration.

C.

Suburban will make a one time payment in the amount equal to $34,834.00, less standard withholding and authorized deductions, representing full and final payment of the Employee’s account balance under the “Suburban Propane, L.P. Long Term Incentive Program (As Adopted Effective October 1, 1997)”. Payment shall be made within 30 days of receipt of this executed agreement.   Additionally the Employee will be eligible for the current Long Term Incentive Program II (As Adopted Effective October 1, 2002) for the current 2005 Award Cycle that if earned will be payable in November of 2007. Should there be a change of control during the 6-month period after the signing of this agreement. Employee will be eligible in accordance with  the Plan to receive payments for the 2006 and 2007 Award Cycles.

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D.

The Employee shall remain eligible for Company-provided income tax preparation for the tax year ending December 31, 2006 and December 31, 2007. Additionally, the Company will buy out the lease on the Company owned 2005 GMC Yukon used the employee. Once completed, the title and all related documents will be transferred to Employee as owner. Employee will receive a 1099 for the current Fair Market Value of Fifteen Thousand and 00/100 Dollars ($15,000). The current company owned computer in use at Employee’s residence will be transferred to him. Licenses and related documentation will be reported as necessary.

E.

Also, in the event that Suburban Propane Partners, L.P. experiences a “Change of Control and/or the Employee becomes deceased within the Severance Period, any and all remaining monies due will be paid to his/her estate in accordance with this agreement and the terms of the plans.

3.

IN EXCHANGE for such consideration, Employee agrees that his/her acceptance and execution of this Agreement constitutes a full, complete and knowing release and waiver of any claims asserted or non-asserted that he/she now has or now may have against Suburban arising out of his/her employment or termination of employment up to and including the date of this Agreement, including any claims Employee may have under state common law for torts or contracts (including wrongful or constructive discharge, breach of contract, emotional distress) or under federal, state or local statute, regulation, rule, ordinance or order that covers or relates to any aspect of employment or discrimination in employment including, but not limited to the following:

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a.

Title VII of the Civil Rights Act of 1964, as amended;

b.

Civil Rights Act of 1991;

c.

Americans with Disabilities Act;

d.

Equal Pay Act of 1963;

e.

Family and Medical Leave Act of 1993;

f.

Age Discrimination in Employment Act;

g.

Older Worker's Benefit Protection Act;

h.

Worker Adjustment and Retraining Notification Act;

i.

Employee Retirement Income Security Act of 1974;

j.

Occupational Safety and Health Act of 1970;

k.

Fair Labor Standards Act;

l.

Consumer Credit Protection Act, Title III;

m.

New Jersey Law Against Discrimination;

n.

New Jersey Conscientious Employee Protection Act;

o.

New Jersey Worker and Community Right to Know Act;

p.

New Jersey Family Leave Act;

q.

New Jersey Worker Health and Safety Act;

r.

New Jersey Civil Rights Act;

s.

any comparable state laws which may apply;

t.

any state or federal “whistleblower” statutes; or

u.

any claim for severance pay, bonus, salary, Suburban stock, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance or any other fringe benefit, workers' compensation or disability except as may otherwise be provided in this Agreement.  

The foregoing shall not affect vested rights the Employee may possess under any pension or retirement plan.

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4.

IN FURTHER CONSIDERATION FOR THE PAYMENTS SET FORTH ABOVE, Employee hereby, on behalf of himself/herself, his/her descendants, ancestors, dependents, heirs, executors, administrators, assigns and successors, covenants not to sue, and fully and forever releases and unequivocally discharges Suburban, its subsidiaries, affiliates, divisions, successors, predecessors and assigns, together with its past and present trustees, directors, officers, agents, attorneys, insurers, employees, unit holders, and representatives, and all persons acting by, through, under or in concert with any of them (collectively “Releasees”) from any and all claims, wages demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders or liabilities of whatsoever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected which the Employee now  owns, holds, or claims to have, own, or hold or that Employee at any time heretofore had, owned, held or claimed to have, own, or hold, against each or any of the Releasees.

5.

THE EMPLOYEE covenants and agrees that he/she will not, either individually or in concert with others, file or voluntarily participate or assist in the prosecution of any court proceedings against the Releasees, provided that nothing in this Agreement shall prevent (a) Employee’s participation in any such proceeding where such participation is required by summons or subpoena or is otherwise compelled by law, or (b) Employee’s challenge to the validity of this Release.

6.

THE EMPLOYEE agrees that during the Severance Period, he/she shall not:

A.

Directly or indirectly, whether as a partner, employee, creditor, shareholder, or otherwise promote, participate, or engage in any activity competitive with Suburban's business (including any LP-Gas, Fuel Oil or HVAC

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Business) within the states in which Suburban conducts operations, except as may be requested or permitted in writing by Suburban. Employee acknowledges that this restriction is reasonable given that he had Company-wide responsibilities.  In addition, during the Severance Period and solely in the states and territories described in the preceding sentence, Employee shall not take any action, without Suburban's prior written reasonable consent, to establish or form an LP-Gas, Fuel Oil or HVAC Business competitive with Suburban's business, or to become employed by or render services, advice or assistance to any such competing business.

B.

Solicit (a) the employment of or hire any employee of Suburban or assist in the hiring of any such employee; (b) any customer of Suburban within the states in which Suburban conducts operations; or (c) any person which Employee solicited on behalf of Suburban while employed by Suburban. In addition, Employee shall not interfere with or attempt to interfere with any relationship, contractual or otherwise, between Suburban and its customers, employees or vendors.  

Employee's failure to comply with the provisions of this Section 6 shall entitle Suburban (in addition to all other legal and equitable remedies Suburban may have) to terminate or seek reimbursement of the provision or payment of any benefits or severance amounts to which Employee may otherwise be entitled under this Release.  The provisions of this Section 6 shall supersede the terms and conditions of an Agreement dated the 29th day of July, 1997 by and between Suburban and the Employee and shall not preclude the Employee from investing in publicly traded companies.

7.

THE EMPLOYEE agrees that he/she will not disparage Suburban or its officers, directors, or employees to any third parties (including, but not limited to, investors, customers or employees of Suburban; potential investors, customers or employees of

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Suburban; competitors; suppliers; or vendors) or through any medium (including, but not limited to, trade publications, newspapers, or the internet).  Suburban agrees that it will not disparage Employee to any third parties or through any medium (including, but not limited to, trade publications, newspapers, or the internet).

8.

THE EMPLOYEE further agrees not to disclose to persons or entities not employed by, or affiliated with Suburban, nor use for his/her own benefit, any information or data not generally available to the public which was developed or obtained by the Employee during his/her employment by Suburban, either before or after his/her execution of this Release, or which in any manner relates to Suburban or the manner in which its business is conducted.

9.

THE EMPLOYEE understands and agrees that he/she has no right to further employment with Suburban and that Suburban will have no obligation to reemploy him/her at any time in the future.

10.

THE EMPLOYEE represents that he/she has returned to Suburban all Suburban property in the possession of Employee, including but not limited to Suburban property, assets, policy and procedure manuals.

11.

THE EMPLOYEE hereby agrees and acknowledges that this Release and its contents shall not constitute or be deemed an admission of liability or wrongdoing on behalf of Suburban or the Employee, the same being expressly denied by each party.

12.

THE EMPLOYEE covenants and agrees that he/she will treat this Release and its contents in a confidential manner and not disclose any of its terms, including the amount of money referred to or the terms of the non-compete provision contained in this Release, with any party other than his/her own spouse, attorney(s), accountant(s) or other professional advisors. Suburban likewise agrees to keep this Release and its contents confidential.

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13.

THE EMPLOYEE warrants and agrees that he/she is responsible for any federal, state, and local taxes which may be owed by him/her by virtue of the receipt of any portion of the consideration herein provided.  Employee agrees to hold Suburban harmless from any claims by taxing authorities arising solely out of Employee's failure to properly report any amounts received by Employee pursuant to this Release.

14.

THE EMPLOYEE acknowledges that he/she has been encouraged to seek the advice of an attorney of his/her choice in regard to this Release.  Suburban and the Employee represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, or they have knowingly and willingly not sought the advice of their attorneys.  The Employee hereby understands and acknowledges the significance and consequences of such Release and represents that the terms of this Release are fully understood and voluntarily accepted by him/her, without coercion.

15.

THE EMPLOYEE further agrees and understands that he/she has twenty-one (21) days from his/her receipt of this Release to review and return this Release to Suburban’s Human Resources Department in Whippany, New Jersey and seven (7) days following his /her signing of this Release to revoke the Release.

16.

THE EMPLOYEE acknowledges that he/she has had a sufficient amount of time to consider the terms of this Release.  Both the Employee and Suburban have cooperated in the drafting and preparation of this Release. Hence, in any construction to be made of this Release, the same shall not be construed against any party on the basis that the party was the drafter. In any event, it is agreed that this Release shall be interpreted in accordance with the laws of the state of New Jersey.

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17.

THIS RELEASE instrument constitutes the entire agreement concerning the Employee's employment and termination and all other subjects addressed herein. This Release supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning all subject matters covered herein. This is an integrated document.  Any amendments or changes in the obligations created by this Agreement shall not be effective unless reduced to writing and signed by all parties. This Release is personal to the Employee and may not be assigned by him/her.

18.

IF ONE OR MORE of the provisions of this Release shall for any reason be held invalid, illegal or unenforceable in any respect by a Court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect or impair any other provision of this Release, but this Release shall be construed as if such invalid, illegal or unenforceable provision had not been contained herein. Employee's covenants and obligations under this Release shall survive the Severance Period unless expressly limited to said period.

PLEASE READ CAREFULLY.   YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS AGREEMENT.  THIS AGREEMENT INCLUDES A RELASE OF ALL KNOWN AND UNKNOWN CLAIMS.

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IN WITNESS WHEREOF, the Employee and Suburban have executed this Release and Waiver of all claims as of the date first above written.

	Suburban Propane, L.P.
/s/ JEFFREY S. JOLLY	By:	/s/  MICHAEL M. KEATING
Jeffrey S. Jolly	Title:      VP – HR AND ADMINISTRATION

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EX-10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated as of February 1, 2007, by and between Suburban Propane, L.P.  (the "Partnership") and Michael J. Dunn, Jr. (the "Executive").

WHEREAS, the parties wish to set forth their understanding and agreement regarding the employment of the Executive by the Partnership.

WHEREAS, the Executive is currently President of the Partnership and desires to continue in such position;

WHEREAS, the Partnership desires to continue to employ the Executive as President;

WHEREAS, the Partnership and the Executive desire that the term of the Executive's employment under this Agreement shall commence upon February 1, 2007 (the date of such consummation, the "Effective Date").

NOW, THEREFORE, in consideration of the premises and the mutual benefits and covenants contained herein, the parties hereto, intending to be bound, hereby agree as follows:

1.

Term

The initial term of employment under this Agreement shall be for the period commencing on the Effective Date and ending on the second anniversary thereof (the "Renewal Date"), or if extended pursuant to this Section 1, ending on any anniversary of the Renewal Date, subject to termination as hereinafter provided (such initial period and extension(s) thereof being hereinafter referred to as the "Employment Term").  Unless earlier terminated in accordance with the provisions of Section 5 hereof, upon the Renewal Date and upon each anniversary date thereof, the Employment Term shall be automatically extended for an additional period of one year upon the terms and conditions set forth herein unless written notice of termination (a "Non-Renewal Notice") is given by either party at least ninety days prior to the Renewal Date or relevant anniversary thereof, in which event the provisions of Section 6 shall apply.

2.

Duties and Status

2.1.

Duties.  The Partnership hereby employs the Executive as President. Executive shall report to the Chief Executive Officer and shall perform duties of the type customarily performed by persons serving in the position of President of a business of the size, type and nature of the Partnership.  If requested to do so, the Executive shall serve (without additional compensation) on the Board of Supervisors of the Partnership and Suburban Propane Partners, L.P. (the “MLP”) (the "Board") and committees thereof.  The Executive accepts such positions and agrees to perform those duties, services and responsibilities incident thereto as may be assigned to him or vested in him by the Chief Executive Officer and the Board from time to time. The Executive also agrees (a) subject to Section 2.2 below, to devote his full business time, attention and skill to the performance of, and to perform faithfully, efficiently and with undivided loyalty, such duties, services and responsibilities and (b) to use his best efforts to promote the interests of the Partnership.

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2.2.

Exclusive Employment.  During the Employment Term, the Executive shall not engage in other employment or consulting work or any trade or business for his own account or for or on behalf of any other person, firm or corporation.  Notwithstanding the foregoing, during the Employment Term the Executive may (a) serve on (i) civil and charitable boards and committees and (ii) such other corporate boards or committees as are approved by the Board, which approval shall not be unreasonably withheld and (b) manage personal investments, provided that such service or management does not interfere with the performance of the Executive's duties hereunder.

3.

Compensation and Benefits

In consideration for his services under this Agreement.  the Executive shall be compensated as follows:

3.1.

Salary.  The Partnership shall pay to the Executive during the Employment Term a salary (the "Base Salary"), payable in accordance with the normal payroll practices of the Partnership then in effect, in the amount of $400,000 per fiscal year (pro rated in the case of the first fiscal year and any other partial fiscal year).  The amount of Base Salary shall be reviewed by the Compensation Committee of the Board (the “Compensation Committee”) on at least an annual basis and may be increased as the Compensation Committee deems appropriate but Base Salary, as increased, may not be decreased during the Employment Term.

3.2.

Bonuses.  For each fiscal year (or portion thereof) of the Partnership during the Employment Term, the Executive will be eligible for a bonus under the Partnership’s Annual Incentive Plan for Salaried Employees, as in effect from time to time, based on the attainment by the Partnership of performance targets set by the Compensation Committee.  The amount of such bonus for a fiscal year or portion thereof (the "Annual Bonus") payable pursuant to the terms hereof shall not exceed 110% of the Executive's Base Salary for such year (or portion thereof) to which it relates (the "Maximum Annual Bonus").  The Annual Bonus, if any, shall be paid no later than the date that is 2½ months from the end of the calendar year in which the bonus is earned.

3.3.

Long-Term Incentive Compensation Programs.  Executive shall be eligible to participate in long-term incentive compensation programs (including the 2000 Restricted Unit Plan and the 2003 Long-Term Incentive Plan) applicable to other senior executives of the Partnership in the discretion of the Compensation Committee from time to time.

3.4.

Vacation.  The Executive shall be entitled to such number of annual paid vacation days and the number of days of paid holidays, leaves of absence, and leaves for illness or temporary disability as may be provided in the policies of the Partnership in respect of other executives and senior managers of the Partnership, but in no event shall the Executive be entitled to less than four weeks vacation per year.

3.5.

Reimbursement of Expenses.  The Executive shall be entitled to receive reimbursement of all reasonable expenses incurred by him in connection with the performance of his duties hereunder, in accordance with the policies and procedures of the Partnership.

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3.6.

Benefits.  The Executive shall be entitled to participate in employee benefit and fringe benefit plans and programs (including life, health, disability and officer indemnity insurance and retirement plans) generally made available to other senior executives and senior managers by the Partnership.  Nothing in this Agreement shall restrict the right of the Partnership to amend, modify or terminate any such plans or programs.  

3.7.

Company Car.  The Partnership shall reimburse the Executive for any and all costs and expenses reasonably incurred by the Executive in connection with the Executive's leasing of a car in accordance with Partnership policy relating to gas, insurance, maintenance, etc.

4.

Non-Competition; Confidential Information

The Executive and the Partnership recognize that due to the nature of the Executive's engagement hereunder and the relationship of the Executive to the Partnership and the MLP, the Executive will have access to and will acquire, and may assist in developing, confidential and proprietary information relating to the business and operations of the Partnership, the MLP and their affiliates, including, without limiting the generality of the foregoing, information with respect to the business of the Partnership, the MLP and their affiliates.  The Executive acknowledges that such information will be of central importance to the business of the Partnership, the MLP and their affiliates and that disclosure of it to, or its use by, others could cause substantial loss to the Partnership and the MLP.  The Executive accordingly agrees as follows:

4.1.

Non-Competition; Non-Solicitation.

(a)

From the Effective Date until the later of (i) if any severance is payable pursuant to Section 6.2 hereof, the expiration of the Severance Period (as defined in Section 6.2 hereof) or (ii) the first anniversary of the Date of Termination (as defined in Section 5.7 hereof), the Executive shall not, directly or indirectly, either individually or as owner, partner, investor, agent, director, officer, employee, consultant, independent contractor or otherwise, except for the account of and on behalf of the Partnership, the MLP or their affiliates, own, manage, operate, direct, join, control, be employed by, or participate in the ownership, management, operation or control of, or be connected in any manner with, including, but not limited to, holding the positions of shareholder, member, director, officer, consultant, agent, representative, independent contractor, employee, partner or investor, in or for any business or enterprise engaged in (i) the marketing or distribution of domestic retail distribution of propane, fuel oil and refined fuels for residential, commercial, industrial (including engine fuel), agricultural or other retail users, (ii) marketing of natural gas and electricity in deregulated markets (ii) the wholesale distribution of propane in the United States or the wholesale brokerage of propane in Canada, or (iii) the domestic retail distribution of energy-related supplies or equipment, including home and commercial appliances.

(b)

From the Effective Date until the second anniversary of the Date of Termination (as defined in Section 5.7 hereof), the Executive shall not, directly or indirectly, either individually or as owner, partner, shareholder, member, investor, agent, director, officer, employee, consultant, agent, independent contractor or otherwise, except for the account of and

4

on behalf of the Partnership, the MLP or their affiliates, solicit, endeavor to entice away from the Partnership, the MLP or their affiliates, or otherwise engage in any activity to, directly or indirectly, influence, attempt to influence, disrupt or terminate the relationship of the Partnership, the MLP or any of their affiliates with, any of its customers, prospective customers, suppliers, prospective suppliers, employees, directors, independent contractors, representatives, agents or other persons or entities with a past, present or prospective relationship with the Partnership, the MLP or any of their affiliates .

(c)

Nothing in this Section 4.1 shall be construed to prevent the Executive from owning as an investment not more than 0.5% of a class of equity or debt securities issued by any competitor of the Partnership, which securities are publicly traded and registered under Section 12 of the Securities Exchange Act of 1934.

4.2.

Proprietary Information.  The Executive shall keep confidential any and all "confidential or proprietary information" (as defined hereinafter) of the Partnership and its affiliates, and shall not, other than in connection with the business of the Partnership and the MLP or as required, in the opinion of counsel, by law or an order of a court or regulatory agency, directly or indirectly, disclose any such information to any person or entity, or use the same in any way and then, only after as much notice is provided to the Partnership as is practicable under the circumstances.  Upon the expiration of the Employment Term, the Executive shall promptly return to the Partnership all property, keys, notes, memoranda, writings, lists (including customer lists), files, reports, correspondence, logs, machines, software, technical data or any other tangible product or document which has been produced by, received by, or otherwise submitted to the Executive by the Partnership or any of its affiliates at any time.  For purposes of this Agreement, "confidential or proprietary information" means any information relating to the Partnership or any affiliate of the Partnership which is not generally available from sources outside the Partnership or any of its affiliates (other than as a result of disclosure by the Executive).

4.3.

Partnership's Remedies for Breach.  It is recognized that damages in the event of breach of this Section 4 by the Executive would be difficult to ascertain, and it is therefore agreed that each of the Partnership and the MLP, in addition to and without limiting any other remedy or right either may have, shall have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach or prospective breach.  The existence of this right shall not preclude any other rights and remedies at law or in equity which the Partnership or the MLP may have.  Neither the Partnership nor the MLP shall be required to post any bond in connection with the foregoing.  The Executive acknowledges and agrees that the provisions of this Section 4 are reasonable and necessary for the successful operation of the Partnership and the MLP and that the Partnership would not have entered into this Agreement if the Executive had not agreed to the provisions of this Section 4.

4.4.

Enforceability.  The covenants set forth in Sections 4.1 and Section 4.2 shall be construed as independent of any of the other provisions contained in this Agreement and shall be enforceable as aforesaid, notwithstanding the existence of any claim or cause of action of the Executive against the Partnership, the MLP or any of their affiliates, whether based on this Agreement or otherwise.  In the event that any of the provisions of this Section 4 should ever be adjudicated to exceed the time or other limitations permitted by applicable law, then such

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provisions shall be deemed reformed in any jurisdiction to the time or other limitations permitted by applicable law. The provisions of this Section 4 shall survive the expiration or the termination of this Agreement. If the Partnership asserts a claim against the Executive for violation of any covenant set forth in Section 4.1 or Section 4.2 and the Executive prevails on the merits in a material respect on such claim, the Partnership shall pay the reasonable attorney’s fees and costs incurred by the Executive in connection with such claim.

5.

Termination of Employment

5.1.

Death or Disability.  The Employment Term shall terminate automatically upon the Executive's death or Disability (as hereinafter defined).  "Disability" shall mean any physical or mental impairment, infirmity or incapacity rendering the Executive substantially unable to perform his duties hereunder for a period of time exceeding 180 days in the aggregate during any period of twelve consecutive months.  A determination of Disability shall be made by a physician independent of the Partnership chosen by the Partnership.  In the event of an initial determination of Disability, the Executive may seek a second opinion of his choosing.  Where the first and second opinions differ, a third opinion rendered by a physician mutually agreed to by the Partnership and the Executive shall be deemed final. For so long as the Executive is receiving the Base Salary during such twelve month period, any benefits under the Partnership's disability insurance policies to which the Executive would be entitled with respect to such period shall accrue to, and be for the benefit of, the Partnership.

5.2.

Cause.  The Partnership may terminate the Executive's employment and the Employment Term for "Cause." For purposes of this Agreement, “Cause” shall mean  (a) the Executive’s gross negligence or willful misconduct in the performance of his duties, (b) the Executive’s willful or grossly negligent failure to perform his duties, (c) the breach by the Executive of any written covenants made to the Partnership or the MLP including a material breach by the Executive of any of the provisions of Section 4.1 or 4.2 hereof; (d) dishonest, fraudulent or unlawful behavior by the Executive (whether or not in conjunction with employment) including a willful or grossly negligent violation of any securities or financial reporting laws, rules or regulations or any policy of the Partnership or the MLP relating to the foregoing or the Executive being subject to a judgment, order or decree (by consent or otherwise) by any governmental or regulatory authority which restricts his ability to engage in the business conducted by the Partnership, the MLP and any of their affiliates, or (e)  willful or reckless breach by the Executive of any policy adopted by the Partnership or the MLP, concerning conflicts of interest, standards of business conduct or fair employment practices or procedures with respect to compliance with applicable law.

5.3.

Good Reason.  The Executive's employment and the Employment Term may be terminated by the Executive for Good Reason.  For purposes of this Agreement.  "Good Reason" means: (a) any failure by the Partnership to comply in any material respect with any of the provisions of Article 3 of this Agreement which is not cured within thirty days following notice by the Executive; (b) a material diminution in the Executive's title, authority, duties or responsibilities, without the consent of the Executive; or (c) the requirement by the Partnership, without the Executive's consent, that the Executive be based more than 35 miles from the Executive's present office location or more than 50 miles from the Executive's present residence.

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5.4.

Termination without Cause.  Notwithstanding anything to the contrary herein, the Partnership may terminate the Executive's employment hereunder and the Employment Term at any time and the Executive may be removed as an officer of the Partnership at any time, subject to the provisions of Section 6.

5.5.

Non-Renewal.  The Executive's employment and the Employment Term may be terminated by either party pursuant to a Non-Renewal Notice, subject to the provisions of Section 6.

5.6.

Notice of Termination.  Any termination of employment hereunder (other than termination as a result of death) by the Partnership or by the Executive shall be communicated by Notice of Termination (as hereinafter defined) to the other party hereto given in accordance with Section 8.2 of this Agreement.  For purposes of this Agreement, a "Notice of Termination" means a written notice which (a) indicates the specific termination provision in this Agreement relied upon, and (b) sets forth the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated.

5.7.

Date of Termination.  The termination of the Executive's employment pursuant to Section 5 shall be effective on the date that the Executive or the Partnership, as the case may be, receives the Notice of Termination; provided however, that (a) if the Executive's employment is terminated by reason of death, the Date of Termination shall be the date of death of the Executive, (b) if the Executive's employment is terminated by reason of Disability, the Date of Termination shall be the date that a physician finally determines in accordance with Section 5.1 that a Disability exists with respect to the Executive, (c) if the Executive terminates his employment, the Date of Termination shall be the tenth Business Day after receipt by the Partnership of the Notice of Termination (or, in the event of termination for Good Reason as set forth in Section 5.3(a), the tenth Business Day after the expiration of the 30 day cure period) and (d) if the Executive's employment is terminated pursuant to a Non-Renewal Notice, the Date of Termination shall be the Renewal Date.

6.

Payment Upon Termination

6.1.

Change of Control.  Subject to Section 6.4 hereof, in the event that (x) within six months prior to a Change of Control or (y) within two years following a Change of Control, either the Partnership terminates the Executive's employment hereunder without Cause (including pursuant to a Non-Renewal Notice) or the Executive terminates his employment hereunder with Good Reason, (a) the Partnership shall pay to the Executive, subject to Section 6.4, the sum of (i) the portion of the Base Salary earned but unpaid as of the Date of Termination, (ii) the Pro-rata Bonus (as defined below) and (iii) an amount equal to two times the sum of (A) the Base Salary plus (B) the Maximum Annual Bonus and (b) the Partnership shall provide to the Executive and his dependents from the Date of Termination until the expiration of the second anniversary of the Date of Termination, (the “Severance Period”), medical benefits substantially equivalent to the medical benefits provided by the Partnership to senior executives and their dependents during such period; provided, however, that benefits otherwise receivable by the Executive pursuant to clause (b) of this Section 6.1 shall be reduced to the extent comparable benefits are actually provided to the Executive or his dependents by another party (and the Executive shall report to the Partnership any benefits that are actually

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provided to him); provided, further, that the Partnership's obligation and the Executive's rights under clause (a) (ii) and (iii) and clause (b) of this Section 6.1 shall terminate immediately upon the occurrence of a Competition Event (as defined below).

6.2.

Good Reason, Termination without Cause.  In the event that the Executive terminates his employment for Good Reason or the Partnership terminates the Executive's employment without Cause or has delivered a Non-Renewal Notice to the Executive, then, subject to Section 6.5, the Partnership shall, without duplication of any amounts paid or benefits provided pursuant to Section 6.1, (a) pay to the Executive (i) all earned but unpaid Base Salary as of the Date of Termination, (ii) an amount equal to two times the Base Salary and (iii) the Annual Bonus the Executive would have received for such fiscal year, calculated as if the executive had remained employed for the entire fiscal year determined and paid in accordance with Section 3.2 herein and (b) provide to the Executive and his dependents, until the expiration of the Severance Period, medical benefits substantially equivalent to the medical benefits provided by the Partnership to senior executives and their dependents during such period; provided, however, that benefits otherwise receivable by the Executive pursuant to clause (b) of this Section 6.2 shall be reduced to the extent comparable benefits are actually provided on the Executive's behalf by another party (and the Executive shall report to the Partnership any benefits that are actually provided to him); provided, further, that the Partnership's obligation and the Executive's rights under clause (a)(ii) and (iii) and clause (b) of this Section 6.2 shall terminate immediately upon the occurrence of a Competition Event (as defined below).  Notwithstanding anything in this Agreement to the contrary the Executive’s Retirement (as defined below) shall not to give rise to any benefits under this section 6.2.  

6.3.

Death, Disability, Cause, Without Good Reason.  In the event that the Executive's employment is terminated (a) by reason of the Executive's death or Disability, (b) by the Partnership for Cause, (c) by the Executive without Good Reason or (d) by the Executive pursuant to a Non-Renewal Notice, then, subject to Section 6.4, the Partnership shall pay to the Executive, the Executive's estate, or the Executive's legal representative, as the case may be, the Base Salary earned but unpaid as of the Date of Termination, plus, in the event that such termination is by reason of death, Disability or the delivery of a Non-Renewal Notice, the Pro-rata Bonus.

6.4.

Excise Taxes.

(a)

In the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")) to the Executive or for his benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, his employment with the Partnership or a change in ownership or effective control of the Partnership or of a substantial portion of its assets (a "Payment" or "Payments") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including the Excise Tax, any interest or penalties, other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes

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shown due on his return, imposed with respect to such taxes and the Excise Tax), including any income tax and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  

(b)

An initial determination as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Partnership's expense by an accounting firm selected by the Partnership and reasonably acceptable to the Executive which is designated as one of the five largest accounting firms in the United States (the "Accounting Firm").  The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation, to the Partnership and the Executive within five days of the Executive's termination of employment (if applicable) or such other time as requested by the Partnership or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax).  Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute").  The Gross-Up Payment, if any, as determined pursuant to this Section 6.4 shall be paid by the Partnership to the Executive within five days of the receipt of the Determination.  The existence of the Dispute shall not in any way affect the Executive's right to receive the Gross-Up Payment in accordance with the Determination.  If there is no Dispute, the Determination shall be binding, final and conclusive upon the Partnership and the Executive subject to the application of Section 6.4(c) below.

(c)

As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a portion thereof) will be paid which should not have been paid (an "Excess Payment") or a Gross-Up Payment (or a portion thereof) which should have been paid will not have been paid (an "Underpayment").  An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive's tax liability (whether in respect of the Executive's current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Partnership has failed to make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by reason of determination by the Partnership (which shall include the position taken by the Partnership, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive's satisfaction.  If an Underpayment occurs, the Executive shall promptly notify the Partnership and the Partnership, subject to its rights to dispute whether an overpayment exists and the amount thereof, shall promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on the Executive's return) imposed on the Underpayment.  An Excess Payment shall be deemed to have occurred upon a "Final Determination" (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment.  A "Final Determination" shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive's tax liability by reason of the Excess Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the

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Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive's applicable tax return has expired.  If an Excess Payment is determined to have been made, the amount of the Excess Payment shall be treated as a loan by the Partnership to the Executive and the Executive shall pay to the Partnership on demand (but not less than 10 days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment plus interest at an annual rate equal to the Applicable Federal Rate provided for in Section 1274(d) of the Code from the date the Gross-Up Payment (to which the Excess Payment relates) was paid to the Executive until the date of repayment to the Partnership.

(d)

In the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Partnership shall pay to the applicable government taxing authorities as Excise Tax and income tax withholding, the amount of the Excise Tax and income tax that the Partnership has actually withheld from the Payment or Payments.

6.5.

Compliance With IRC Section 409A.  The Partnership and the Executive each agrees to execute and deliver any reasonable change to this Agreement as the Partnership or the Executive requests, after consultation with respective counsel, to comply with Section 409A of the Code; provided that no change that reduces the then present value of the payments due (or potential due) to the Executive pursuant to this Agreement (without taking into account this Section 6.4(e)) shall be deemed to be reasonable.  The provisions of this paragraph shall survive termination of this Agreement.  Notwithstanding anything herein to the contrary, (i) if at the time of Executive’s termination of employment with the Partnership, Executive is a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Partnership will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date that is six months following Executive’s termination of employment with the Partnership (or the earliest date as is permitted under Section 409A of the Code) and (ii) if any other payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Board, that does not cause such an accelerated or additional tax.  The Partnership shall consult with Executive in good faith regarding the implementation of the provisions of this Section 13(g); provided that neither the Partnership nor any of its employees or representatives shall have any liability to Executive with respect to thereto.

6.6.

Certain Definitions,

(a)

"Pro-rata Bonus" means the bonus that the Executive would have been entitled to receive under Section 3.2 as an Annual Bonus for the full fiscal year in which his employment

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terminated, multiplied by the number of days from the beginning of such fiscal year until the Date of Termination and divided by 365.  The Pro-rata Bonus shall be determined by the Compensation Committee in the manner described in Section 3.2.

(b)

"Competition Event" means any act or activity by the Executive, directly or indirectly, which the Partnership deems, in its good faith judgment, to be a violation of Sections 4.1 and 4.2 hereof.

(c)

"Change of Control" means the occurrence during the Employment Term of:

(i)

An acquisition (other than directly from the MLP) of Common Units or voting equity interests of the MLP (“Voting Securities”) by any “Person” (as the term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the MLP, Suburban Energy Services Group LLC or any of their affiliates, immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than twenty five percent (25%) of the combined voting power of the MLP’s then outstanding Units; provided, however, that in determining whether a Change of Control has occurred, Units which are acquired in a ‘Non-Control Acquisition’ (as hereinafter defined) shall not constitute an acquisition which would cause a Change of Control.  A “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the MLP or the Partnership or (B) any corporation, partnership or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the MLP (for the purposes of this definition, a “Subsidiary”), (ii) the MLP or its Subsidiaries, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined); or

(ii)

approval by the partners of the MLP of (A) a merger, consolidation or reorganization involving the MLP, unless (x) the holders of Units immediately before such merger, consolidation or reorganization own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding Units of the entity resulting from such merger, consolidation or reorganization (the “Surviving Entity” in substantially the same proportion as their ownership of the Units immediately before such merger, consolidation or reorganization, and (y) no person or entity (other than the MLP, any subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the MLP, the Partnership, the Surviving Entity, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of more than twenty five percent (25%) of the then outstanding Units), has Beneficial Ownership of more than twenty five percent (25%) of the combined voting power of the Surviving Entity’s then outstanding voting securities; (B) a complete liquidation or dissolution of the MLP; or (C) the sale or other disposition of fifty percent (50%) or more of the net assets of the MLP to any Person (other than a transfer to a Subsidiary).  A transaction described in clause (x) or (y) of subsection (a) hereof shall be referred to as a “Non-Control Transaction”.

Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the MLP which, by reducing the number of Voting Securities outstanding, increases the

11

proportional number of units Beneficially Owned by the Subject Person, provided that if a Change of Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the MLP, and after such acquisition of Voting Securities by the MLP, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change of Control shall occur.

(d)

“Retirement” shall mean voluntary termination of employment by the Executive following attainment of age 55 and completion of  10 years of “eligible service” to the Partnership or its predecessors, in connection with a bona fide intent by the Executive to no longer seek full time employment in the industries in which the Partnership then participates.  The term “eligible service” shall have the same meaning as the term is used in the Pension Plan for Eligible Employees of Suburban Propane L.P. and Subsidiaries.

6.7.

Mitigation.  The Executive shall have no duty to mitigate with respect to any payments due pursuant to Section 6 by seeking or accepting other employment.

6.8.

Waiver and Release.  As a condition precedent to receiving the compensation and benefits provided under this Section 6, the Executive shall execute a waiver and release substantially in the form attached hereto as Exhibit A.

7.

Compliance with Other Agreements by Executive

The Executive represents and warrants to the Partnership that the execution of this Agreement by him and his performance of his obligations hereunder will not, with or without the giving of notice or the passage of time or both, conflict with, result in the breach of any provision of or the termination of, or constitute a default under, any agreement to which the Executive is a party or by which the Executive is bound.

8.

Miscellaneous

8.1.

This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to the conflicts of laws principles thereof.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the Partnership and the Executive or their respective successors and legal representatives.

8.2.

All notices and other communications hereunder shall be in writing and shall be given by facsimile, hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

Michael J. Dunn, Jr.
c/o Suburban Propane, L.P.

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One Suburban Plaza
Plaza I
240 Route 10 West
Whippany, New Jersey 07981-0206

If to the Partnership:

Suburban Propane, L.P.
One Suburban Plaza
Plaza I
240 Route 10 West
Whippany, New Jersey 07981-0206
Attention:

Paul E. Abel, Esq.

General Counsel and Secretary

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

8.3.

Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

8.4.

Notwithstanding any other provision (including Section 3) of this Agreement to the contrary, the Partnership or other payor may withhold from any amounts payable under this Agreement such taxes or other amounts as shall be required to be withheld pursuant to any applicable law or regulation.

8.5.

The Executive's or the Partnership's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision hereof

8.6.

This Agreement contains the entire understanding of the Partnership and the Executive with respect to the subject matter hereof and thereof and supersedes all prior agreements between the Partnership and the Executive, whether oral or written, except for benefit agreements and plans provided in Section 3 or otherwise available to the Executive.

This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors, permitted assigns, heirs, distributees and legal representatives, including any partnership, corporation or other business organization with which the Partnership may merge or consolidate and the Partnership will require any successor to all or substantially all of the business or assets of the Partnership to expressly assume and agree to perform this Agreement in the same manner as the Partnership would be so required to do.  Nothing in this Agreement, express or implied, is intended to confer upon any other person or entity any rights

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or remedies of any nature whatsoever under or by reason of this Agreement.  Insofar as the Executive is concerned, this contract, being personal, cannot be assigned.

8.7.

"Business Day" means any day excluding Saturday, Sunday, and any day which shall be in the City of New York a legal holiday or a day which banking institutions in the City of New York are authorized by law or other government action to close.  If any date on which a payment is required to be made hereunder is not a Business Day, then such payment (without any additional interest) shall be made on the next succeeding Business Day.

8.8.

Any controversy, dispute or claim arising under this Agreement or any breach thereof (other than in connection with Section 4 hereof) shall be settled by arbitration conducted in New York City in accordance with the American Arbitration Association’s National Rules for the Resolution of Employment Disputes (including Mediation and Arbitration Rules) (“Rules”), a judgment upon any award rendered by the arbitrator may be entered by any federal or state court having jurisdiction thereof.  Any such arbitration shall be conducted by a single arbitrator who shall be a member of National Academy of Arbitrators.  If the parties are unable to agree upon an arbitrator, then an arbitrator shall be appointed in accordance with the Rules of the American Arbitration Association.  The parties intend that this agreement to arbitrate be valid, enforceable and irrevocable and that any determination reached pursuant to the foregoing procedure shall be final and binding on the parties absent fraud.  Each party shall pay its own costs and expenses of such arbitration including attorneys’ fees and the fees and expenses of the arbitrator shall be borne equally by the parties, except that the arbitrators shall be entitled to award the reasonable attorney’s fees and costs and the reasonable costs of arbitration to the Executive if the Executive prevails in such arbitration in any material respect.

8.9.

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(Signatures on following page)

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

SUBURBAN PROPANE, L.P.  By:
By:	/s/ MARK A ALEXANDER
	Name: Mark A. Alexander
	Chief Executive Officer.
/s/  MICHAEL J. DUNN, JR.
Michael J. Dunn, Jr.

15

EXHIBIT A

RELEASE AND WAIVER OF ALL CLAIMS

RELEASE

THIS IS A RELEASE AND WAIVER OF CLAIMS (hereinafter referred to as "Release" or "Agreement") made this ___________day of _____________, 200__, by and between Suburban Propane, L.P. (including its subsidiaries and affiliates, and hereinafter referred to as "Company" or "Suburban") having a principal place of business at 240 Route 10 West, P.O. Box 206, Whippany, New Jersey 07981-0206 and ___________________________ residing at ___________________________________ (hereinafter referred to as “Executive")

WHEREAS, the Company and Executive previously entered into an employment agreement dated _______, 20__ under which Executive was employed by the Company (the “Employment Agreement”); and

WHEREAS, Executive’s employment with the Company (has been) (will be) terminated effective __________________; and

WHEREAS, pursuant to Section 6 of the Employment Agreement, Executive is entitled to certain compensation and benefits upon such termination, contingent upon the execution of this Release (the “Agreement”);

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein and in the Employment Agreement, the Company and Executive agree as follows:

IN EXCHANGE for such consideration set forth in Section 6 of the Employment Agreement, Executive agrees that his/her acceptance and execution of this Agreement constitutes a full, complete and knowing release and waiver of any claims asserted or non-asserted that he/she now has or now may have against Suburban arising out of his/her employment or termination of employment up to and including the date of this Agreement, including any claims Executive may have under state common law for torts or contracts (including wrongful or constructive discharge, breach of contract, emotional distress) or under federal, state or local statute, regulation, rule, ordinance or order that covers or relates to any aspect of employment or discrimination in employment including, but not limited to the following:

a.

Title VII of the Civil Rights Act of 1964, as amended;

b.

Civil Rights Act of 1991;

16

c.

Americans with Disabilities Act;

d.

Equal Pay Act of 1963;

e.

Family and Medical Leave Act of 1993;

f.

Age Discrimination in Employment Act;

g.

Older Worker's Benefit Protection Act;

h.

Worker Adjustment and Retraining Notification Act;

i.

Employee Retirement Income Security Act of 1974;

j.

Occupational Safety and Health Act of 1970;

k.

Fair Labor Standards Act;

l.

Consumer Credit Protection Act, Title III;

m.

New Jersey Law Against Discrimination;

n.

New Jersey Conscientious Employee Protection Act;

o.

New Jersey Worker and Community Fight to Know Act;

p.

New Jersey Family Leave Act;

q.

New Jersey Worker Health and Safety Act;

r.

New Jersey Civil Rights Act;

s.

any comparable state laws which may apply;

t.

any state or federal "whistleblower" statutes; or

u.

any claim for severance pay, bonus, salary; Suburban stock, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance or any other fringe benefit, workers' compensation or disability except as may otherwise be provided in this Agreement.

17

IN FURTHER CONSIDERATION FOR THE PAYMENTS SET FORTH ABOVE, Executive hereby, on behalf of himself/herself, his/her descendants, ancestors, dependents, heirs, executors, administrators, assigns and successors, covenants not to sue, and fully and forever releases and unequivocally discharges Suburban, its subsidiaries, affiliates, divisions, successors, predecessors and assigns, together with its past and pre­sent trustees, directors, officers, agents, attorneys, insurers, employees, unit holders, and representatives, and all persons acting by, through, under or in concert with any of them (collectively "Releasees") from any and all claims, wages demands, rights, liens, agree­ments, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys' fees, damages, judgments, orders or liabilities of whatsoever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsus­pected which the Executive now owns, holds, or claims to have, own, or held or that Executive at any time heretofore had, owned, held or claimed to have, own, or hold, against each or any of the Releasees.

THE EXECUTIVE covenants and agrees that he/she will not, either individually or in concert with others, file or voluntarily participate or assist in the prosecution of any court proceedings against the Releasees, provided that nothing in this Agreement shall prevent (a) Executive's participation in any such proceeding where such participation is required by summons or subpoena or is otherwise compelled by law, or (b) Executive's challenge to the validity of this Release.

THE EXECUTIVE understands and agrees that he/she has no right to further employ­ment with Suburban and that Suburban will have no obligation to reemploy him/her at any time in the future.

THE EXECUTIVE hereby agrees and acknowledges that this Release and its contents shall not constitute or be deemed an admission of liability or wrongdoing on behalf of Suburban or the Executive, the same being expressly denied by each party.

THE EXECUTIVE covenants and agrees that he/she will treat this Release and its con­tents in a confidential manner and not disclose any of its terms, including the amount of money referred to or the terms of the non-compete provision contained in this Release, with any party other than his/her attorney(s), accountant(s) or other professional advisors. Suburban likewise agrees to keep this Release and its contents confidential.

THE EXECUTIVE warrants and agrees that he/she is responsible for any federal, state, and local taxes which may be owed by him/her by virtue of the receipt of any portion of the consideration herein provided. Executive agrees to hold Suburban harmless from any claims by taxing authorities arising solely out of Executive's failure to properly report any amounts received by Executive pursuant to this Release.

SUBURBAN AND THE EXECUTIVE acknowledge and agree that this Agreement does not, and shall not be construed to, release or limit the scope of any

18

existing obligation of the Suburban (i) to indemnify Executive for his acts as an officer or director of Company in accordance with the bylaws of Company and the policies and procedures of Company that are presently in effect, (ii) to Executive with respect to certain compensation and benefits upon termination, pursuant to Section 6 of the Employment Agreement which are contingent upon the execution of this Release or (iii) to Executive and his eligible, participating dependents or beneficiaries under any existing long term incentive plan, group welfare or retirement plan of the Company in which Executive and/or such dependents are participants.

THE EXECUTIVE acknowledges that he/she has been encouraged to seek the advice of an attorney of his/her choice in regard to this Release. Suburban and the Executive repre­sent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, or they have knowingly and willingly not sought the advice of their attor­neys. The Executive hereby understands and acknowledges the significance and conse­quences of such Release and represents that the terms of this Release are fully understood and voluntarily accepted by him/her, without coercion.

THE EXECUTIVE further agrees and understands that he/she has twenty-one (21) days from his/her receipt of this Release to review and return this Release to Suburban's Human Resources: Department in Whippany, New Jersey and seven (7) days following his /her signing of this Release to revoke the Release.

THE EXECUTIVE acknowledges that he/she has had a sufficient amount of time to con­sider the terms of this Release. Both the Executive and Suburban have cooperated in the drafting and preparation of this Release. Hence, in any construction to be made of this Release, the same shall not be construed against any party on the basis that the party was the drafter. In any event, it is agreed that this Release shall be interpreted in accordance with the laws of the state of New Jersey.

IF ONE OR MORE of the provisions of this release shall for any reason be held invalid, illegal or unenforceable in any respect by a Court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect or impair any other provision of Release, but this release shall be construed as if such invalid, illegal, or unenforceable provision had not been contained herein.

(Signature page follows)

19

PLEASE READ CAREFULLY. YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS AGREEMENT. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

IN WITLESS WHEREOF, the Executive and Suburban have executed this Release and Waiver of all claims as of the date first above written.

Suburban Propane, I.P.
By:
Title:	Date:
Executive Name (Print)
	Date:
Executive Signature

20

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a)
Certification of the Chief Executive Officer

I, Mark A. Alexander, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Suburban Propane Partners, L.P.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Supervisors:

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 8, 2007			By:			/s/ MARK A. ALEXANDER
						Mark A. Alexander
						Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a)
Certification of the Vice President and Chief Financial Officer

I, Robert M. Plante, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Suburban Propane Partners, L.P.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Supervisors:

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 8, 2007			By:			/s/ ROBERT M. PLANTE
						Robert M. Plante
						Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350

In connection with the Quarterly Report of Suburban Propane Partners, L.P. (the ‘‘Partnership’’) on Form 10-Q for the period ended December 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Mark A. Alexander, Chief Executive Officer of the Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

			By:			/s/ MARK A. ALEXANDER
						Mark A. Alexander
						Chief Executive Officer February 8, 2007

EX-32.2

EXHIBIT 32.2

Certification of the Vice President and Chief Financial Officer Pursuant to
18 U.S.C. Section 1350

In connection with the Quarterly Report of Suburban Propane Partners, L.P. (the ‘‘Partnership’’) on Form 10-Q for the period ended December 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Robert M. Plante, Vice President and Chief Financial Officer of the Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

			By:			/s/ ROBERT M. PLANTE
						Robert M. Plante
						Vice President and Chief Financial Officer February 8, 2007